4Q 2009 Rail Earnings Reports
January 2010
CSX: (reported January 19, 2010)
Price: $50.51
Price direction after earnings report: DOWN significantly
á
Reported
earnings per share of $.77, but this included a one-time state tax benefit actual continuing earnings per
share were closer to $.73
á
This
was worse than consensus estimate for earnings of $.76 per share
á
Revenues
were down 13% over last year
o
In the
last quarter, revenues were down 23%, so this shows a consecutive improvement
á
Volumes
declined by 7% as drops in coal volume more than made up for increases in
intermodal and automotive
á
Operating
expenses were down 12% in the quarter
á
For
the full year, CSX posted a record operating ratio of 74.7%
á
ŇSame-store
pricingÓ grew by 5.3%, which was a slower rate than in previous quarters
o
Mostly
because of the drop in coal volumes, which are higher-margin
o
Pricing
expectations for 2010 are still a solid 4-5%, which is higher than many
analysts were predicting
á
Management
made some very negative comments about the legislation currently being put
forth by the Senate, claiming it is highly unbalanced
o
Analysts
take these comments with a grain of salt given that negotiations are ongoing
and so the rails have no incentive to say anything positive about the bill at
this time
á
Weak
coal volumes could continue to be a trend and a drag on operating leverage for
many of the rails until mid-2010 at least
o
ManagementŐs
negative tone on coal volumes were a major reason behind the stockŐs 6%+ drop
on the news
á
Analyst
Opinion:
o
Ed
Wolfe of Wolfe Research: Rating is Peer Perform (hold) with price target in
high-50Ős
o
Tom
Wadewitz of JP Morgan: Rating is Overweight (buy) with price target $61
o
Matthew
Troy of Citigroup: Rating is Hold with target price $51
o
Gary
Chase of Barclays: Rating is Equal Weight (hold) with price target $52