CSX's Income Rises to $509 Million
CSX’s net income increased to $509 million, or 51 cents a share, from $455 million, or 45 cents, a year earlier.
Revenue rose 8% to $3.2 billion, beating the $3.15 billion average projection. The average of 23 analysts’ estimates was for earnings of 48 cents a share.
A rebound in consumer demand coupled with a surge in transporting crude oil by rail is driving earnings for CSX, making it an attractive takeover target, said Gary Bradshaw, a fund manager with Hodges Capital Management Inc. in Dallas, which owns railroad shares including CSX, Union Pacific Corp. and Kansas City Southern.
“The rail business is going to continue to be good with the economy improving,” Bradshaw said.“We own them for the good fundamentals.”
Chemicals, including crude oil and liquefied petroleum gas, led CSX’s increase in shipments and coal rose for a second straight quarter for the first time since the beginning of 2011.
CSX is reaping the benefits from increased demand for transportation of energy-related materials, “not just moving crude-by-rail, but also in some of the other commodities” such as sand and liquefied petroleum gas, Chief Financial Officer Fredrik Eliasson said. “That is the positive of the new energy environment we’re finding ourselves in.”
Eliasson said he feels “pretty bullish about where the economy is heading and also some sector trends that seem to be benefiting the railroad industry.”
He declined to comment about a potential merger between CSX and Canadian Pacific.
The company said it expects to post earnings growth of at least 10 % next year, and reiterated a target of an operating ratio in the “mid-60s” in the longer term.
