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CSX to Report Q1 Earnings: Will Low Coal Volumes Mar Results?

CSX Corporation CSX is scheduled to report first-quarter 2021 results on Apr 20, after market close.

The Zacks Consensus Estimate for the company’s first-quarter earnings has been revised downward by 5.8% in the past 60 days. However, the company has an impressive earnings surprise history, having outperformed the Zacks Consensus Estimate in three of the last four quarters, the average beat being 3.2%.

Let’s see how things are shape up for this earnings season.

CSX Corporation Price and EPS Surprise

CSX Corporation price-eps-surprise | CSX Corporation Quote

Factor to Note

CSX’s intermodal segment is expected to reflect higher volumes owing to strong demand for transportation services due to inventory replenishment and higher volumes from East Coast ports. The Zacks Consensus Estimate for intermodal volumes in the first quarter shows an approximate 7% increase from the year-ago reported number. With this anticipated increase in volumes, the consensus mark for intermodal revenues suggests a 7.3% rise from first-quarter 2020 reported figure.

Additionally, the company’s bottom line is expected to have benefited from reduced operating expenses, primarily owing to increased efficiency.

However, low merchandise and coal volumes are likely to have hurt CSX’s top line in the first quarter. The Zacks Consensus Estimate for merchandise volumes indicates a 6.8% decline from first-quarter 2020’s reported figure. The same for coal volumes hints at a 6.1% drop from the year-ago quarter’s reported figure. CSX has been seeing persistent weakness in both domestic and export coal volumes.  The Zacks Consensus Estimate for merchandise and coal revenues shows a 2.9% and 7.6% decrease, respectively, from the year-ago period’s reported numbers.

Earnings Whispers

The proven Zacks model does not predict an earnings beat for CSX this time around. Notably, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, this is not the case here as elaborated below. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: CSX has an Earnings ESP of -1.63% as the Most Accurate Estimate is pegged at 95 cents, lower than the Zacks Consensus Estimate of 96 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: CSX carries a Zacks Rank #3.

Highlights of Q4 Earnings

In the last- reported quarter, CSX delivered an earnings surprise of 4%. The bottom line improved 5.1% year over year due to impressive performance of the intermodal segment. Total revenues outperformed the Zacks Consensus Estimate, but dipped 2.1% year over year owing to lower fuel surcharge revenues and coal volume declines.

Stocks to Consider

Investors interested in the broader Transportation sector may consider Alaska Air Group ALK, Herc Holdings HRI and Southwest Airlines LUV as these stocks possess the right combination of elements to beat on earnings this reporting cycle.

Alaska Air Group has an Earnings ESP of +1.01% and carries a Zacks Rank of 3. The company will release first-quarter 2021 results on Apr 22.

Herc Holdings has an Earnings ESP of +18.81% and sports a Zacks Rank of 1, at present. The company will release first-quarter 2021 results on Apr 22.

Southwest Airlines has an Earnings ESP of +1.07% and a Zacks Rank #3. The company is set to release first-quarter 2021 earnings numbers on Apr 22.

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