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Offload CSX Into Earnings

Summary

CSX reports earnings after-hours today.

Analysts expect a 4% sequential decline in revenue.

Declining railroad traffic and the company's outsized coal exposure will weigh.

I am not sure the company has the will power to cut costs fast enough to maintain its EBITDA margins.

Sell CSX into earnings.

Source: Wall Street Journal

CSX Corporation (NASDAQ:CSX) is set to report earnings today after-hours. Analysts expect revenue of $2.86 billion and eps of $0.46. The revenue estimate implies a 3% decline sequentially. Investors should sell the stock into earnings for the following reasons:

Stagnant Revenue

Q3 revenue of $2.94 billion was down 9% Y/Y; the company also missed analysts' revenue estimate of $2.98 billion. Revenue declines could get worse. Rail traffic is down for the entire industry. For the first 51 weeks of 2015 rail traffic was off 2.3% compared to last year. Headwinds abound; Brent oil prices are sub-$40 and commodity prices are in free fall. China, one of the largest...


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