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Sell CSX After Q3 Revenue Miss

Summary

CSX reported Q3 earnings on Tuesday.

Its $2.94B revenue was down 9% Y/Y and less than the $2.98B analysts were expecting.

A slowing global economy and CSX's exposure to coal (20% of revenue) will be the company's undoing.

CSX Corporation (NYSE:CSX) reported Q3 earnings after-hours on Tuesday. The company reported revenues of $2.94 billion, which missed expectations of $2.98 billion; however, EPS of $0.52 beat the estimate of $0.50. Investors should avoid the stock for the following reasons:

Revenue Declines, Stagnant EBITDA

Q3 revenue was off 9% Y/Y from $3.22 to $2.94 billion, which follows a 6% drop in Q2.

The biggest decliners were the Industrial (down 7% Y/Y) and Coal segments (down 19% Y/Y). Revenue from Metals (included in Industrial) was off 15% Y/Y; sans the disappointing Metals results, Industrial revenue would have been flat Y/Y. The Bloomberg Commodity Index is down over 45% since January 2011; nickel (down 60%)...


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