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Here's Why Investors Should Retain CSX Stock for Now
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CSX’s (CSX - Free Report) proactive efforts to enhance safety in its operations are commendable. The shareholder-friendly approach bodes well for the company. However, CSX’s financial stability is challenged by the surge in operating expenses.
Factors Favoring CSX
CSX's proactive measures to enhance safety through a three-year initiative are commendable, focusing on cultural transformation that begins with leadership and extends throughout the organization. Building on the ONE CSX program, this effort emphasizes inclusivity, respect and proactive risk management. This approach demonstrates a strong commitment to both safety and a positive work environment.
The company has secured new five-year tentative collective bargaining agreements with the International Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers & Helpers and the Transportation Communications Union.
CSX’s commitment to rewarding its shareholders is commendable. In the second quarter of 2024, CSX repurchased shares worth $16 million. In February 2024, the company announced a 9.1% increase in its quarterly dividend to 12 cents per share. CSX has been consistently rewarding its shareholders through dividends and buybacks, returning more than $3.7 billion in 2021, $5.58 billion in 2022 and $4.36 billion in 2023.
CSX: Risks to Watch
CSX continues to grapple with the adverse impacts of the Baltimore Bridge collapse incident. The top line saw a significant decline in the second quarter of 2024, and the overall volume fell by 3% year over year, affecting domestic shipments. The bottom line decreased 9% year over year due to unfavorable pricing and utility mix.
The northward movement in operating expenses is hurting CSX’s bottom line, challenging its financial stability. The surge in operating expenses was primarily caused by an increase in labor expenses. In the second quarter of 2024, total labor expenses rose by 2% compared to the second-quarter 2023 actuals.
Shares of CSX have declined 3.5% year to date compared with its industry’s 1.5% fall.
Image Source: Zacks Investment Research
Zacks Rank
CSX currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked stocks for investors’ consideration in the Zacks Transportation sector include C.H. Robinson Worldwide (CHRW - Free Report) and Westinghouse Air Brake Technologies (WAB - Free Report) .
The company has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters and missed once, delivering an average surprise of 7.3%. Shares of CHRW have risen 10.6% in the past year.
WAB carries a Zacks Rank #2 (Buy) at present andhas an expected earnings growth rate of 26% for the current year.
The company has a discouraging track record with respect to the earnings surprise, having surpassed the Zacks Consensus Estimate in three of the trailing four quarters. The average beat is 11.8%. Shares of WAB have climbed 55.3% in the past year.
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Here's Why Investors Should Retain CSX Stock for Now
CSX’s (CSX - Free Report) proactive efforts to enhance safety in its operations are commendable. The shareholder-friendly approach bodes well for the company. However, CSX’s financial stability is challenged by the surge in operating expenses.
Factors Favoring CSX
CSX's proactive measures to enhance safety through a three-year initiative are commendable, focusing on cultural transformation that begins with leadership and extends throughout the organization. Building on the ONE CSX program, this effort emphasizes inclusivity, respect and proactive risk management. This approach demonstrates a strong commitment to both safety and a positive work environment.
The company has secured new five-year tentative collective bargaining agreements with the International Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers & Helpers and the Transportation Communications Union.
CSX’s commitment to rewarding its shareholders is commendable. In the second quarter of 2024, CSX repurchased shares worth $16 million. In February 2024, the company announced a 9.1% increase in its quarterly dividend to 12 cents per share. CSX has been consistently rewarding its shareholders through dividends and buybacks, returning more than $3.7 billion in 2021, $5.58 billion in 2022 and $4.36 billion in 2023.
CSX: Risks to Watch
CSX continues to grapple with the adverse impacts of the Baltimore Bridge collapse incident. The top line saw a significant decline in the second quarter of 2024, and the overall volume fell by 3% year over year, affecting domestic shipments. The bottom line decreased 9% year over year due to unfavorable pricing and utility mix.
The northward movement in operating expenses is hurting CSX’s bottom line, challenging its financial stability. The surge in operating expenses was primarily caused by an increase in labor expenses. In the second quarter of 2024, total labor expenses rose by 2% compared to the second-quarter 2023 actuals.
Shares of CSX have declined 3.5% year to date compared with its industry’s 1.5% fall.
Image Source: Zacks Investment Research
Zacks Rank
CSX currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked stocks for investors’ consideration in the Zacks Transportation sector include C.H. Robinson Worldwide (CHRW - Free Report) and Westinghouse Air Brake Technologies (WAB - Free Report) .
C.H. Robinson Worldwide currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. CHRW has an expected earnings growth rate of 25.2% for the current year.
The company has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters and missed once, delivering an average surprise of 7.3%. Shares of CHRW have risen 10.6% in the past year.
WAB carries a Zacks Rank #2 (Buy) at present andhas an expected earnings growth rate of 26% for the current year.
The company has a discouraging track record with respect to the earnings surprise, having surpassed the Zacks Consensus Estimate in three of the trailing four quarters. The average beat is 11.8%. Shares of WAB have climbed 55.3% in the past year.