CSX Corp. CSX is slated to release its first-quarter 2015 results on Apr 14, 2015, after markets close.
In the last reported quarter, the company’s earnings managed to meet the Zacks Consensus Estimate. In addition, the company has outpaced the consensus estimate in the remaining three of the trailing four quarters, with an average earnings beat of 3.92%. Let’s see how things are shaping up for this announcement.
Factors Likely to Influence this Quarter
We believe favorable rail industry pricing and operational improvement will aid the company’s top-line growth and drive earnings going forward. In March, the company stated that it is well on track to register double-digit earnings growth in 2015 buoyed by favorable pricing and volume growth in the Intermodal and Merchandise divisions. Moreover, increased efficiencies in operations also support the company’s bottom-line growth outlook for 2015.
However, management anticipates at least a 5% decline in its domestic coal shipments in 2015. Thus, the weak 2015 projection for domestic coal shipments poses concern. Furthermore, declining crude oil prices have also resulted in the company toning down its projection for crude oil shipments, which is expected to display moderate growth compared to original expectations. In addition, regulatory issues and competition remain as challenges for the company.
Earnings Whispers
Our proven model does not conclusively show that CSX Corp. is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here as elaborated below:
Zacks ESP: CSX Corp. has an earnings ESP of -2.22%. This is because the Most Accurate estimate stands at 44 cents while the Zacks Consensus Estimate is pegged higher at 45 cents.
Zacks Rank: CSX Corp.’s Zacks Rank #3 increases the predictive power of ESP. Nevertheless, we need to have a positive ESP to be confident of an earnings surprise.
Note that we caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies to consider as our model shows these have the right combination of elements to post an earnings beat this quarter:
Atlas Air Worldwide Holdings, Inc. AAWW has an earnings ESP of +2.04% and carries a Zacks Rank #2.
Avolon Holdings Limited AVOL has an earnings ESP of +4.69% and a Zacks Rank #3.
Ryder System, Inc. R has an earnings ESP of +3.96% and a Zacks Rank #3.
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