Consumer Discretionary CSX Corporation (NASDAQ:CSX) New CEO Doesn't Disappoint

CSX Corporation (NASDAQ:CSX) New CEO Doesn't Disappoint

Published By News Desk at April 20, 2017 10:40 am Underlying EPS of 51c was well ahead of Deutsche Bank's /consensus 42/43c, driven by both significant top and bottom line beats

CSX Corporation (NASDAQ:CSX) reported strong 1Q results after the close. Underlying EPS of 51c was well ahead of Deutsche Bank's /consensus 42/43c, driven by both significant top and bottom line beats. Total revenue growth of 10% was about double expectations, driven almost entirely by much better yield (revenue per carload +7% yoy vs. expectations in the +3-4% range, reflecting +3.9% yoy pricing [best pricing comp since 4Q’15] and likely some positive mix). Also impressive was cost control (Hunter Harrison’s specialty), with total operating expenses of $1.984B exactly in line with the firm's model despite $115M in higher revenue (translating to 400bps of yoy margin expansion and 72% incremental margins). To this point Deutsche Bank notes average employee count was down 6% yoy in the Q and down over 7% in March- the month Hunter Harrison was appointed CEO (March 7).

Net/net the firm did expects a positive reaction to these results, with potential for healthy follow-through following tomorrow’s 8:30am ET conference call (Hunter Harrison’s first as CSX CEO), where Deutsche Bank expects the tone to be bullish and management to provide more details around its plan to reach significantly higher profitability levels over the mid-term (~3yrs).