Will CSX Stock Rise After Q4 Results?

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CSX Corporation (NYSE: CSX) is expected to report fourth quarter 2022 results on Wednesday, January 25. We expect CSX
CSX
to put income and earnings above street expectations. The company should continue to benefit from a shift to cheaper transportation alternatives. However, our forecast indicates that the CSX stock has little room for growth, as discussed below. Our interactive dashboard analysis of Example of CSX earnings has additional details.

(1) Expected revenues will match consensus estimates

  • Trefis estimates CSX’s fourth quarter 2022 net income to be approximately $3.82 billion, up 11.5% yoy and slightly above the consensus estimate of $3.72 billion.
  • Higher inflation has led some shippers to turn to low-cost alternatives, such as railroads. With costs rising, the company should be able to increase its average revenue per load, which bodes well for its revenue growth.
  • Looking back to the third quarter, the company reported an 18% increase in sales to $3.9 billion, led by a solid 18% increase in average sales per car load, while total car load volume grew 2%.
  • Our dashboard on CSX earnings has details about the segments of the company.

(2) EPS will likely be above consensus estimates

  • CSX’s earnings per share (EPS) in Q4 2022 are expected to be $0.52 per Trefis analysis, well above the consensus estimate of $0.46.
  • CSX’s net income of $1.1 billion in the third quarter of 2022 reflected a 14.8% increase from the quarter-ago figure of $968 million as revenue growth was partially offset by a decline in net income. operating ratio by 310 basis points.
  • For the full year 2023, we expect adjusted earnings per share to be higher at $2.00 compared to $1.68 in 2021 and an estimated $1.92 in 2022.

(3) CSX stock looks fairly valued

  • We estimate CSX’s rating approximately $34 per share, reflecting a 6% premium over the current market price of $32.
  • This represents a 17x forward P/E ratio based on our $2.00 EPS forecast for CSX, compared to the last three-year average of 19x, implying that CSX stocks have little room for growth.
  • However, if CSX reports optimistic Q4 results and offers a better 2023 outlook than street estimates, it is likely that the P/E multiple will be revised upwards, resulting in higher levels for CSX shares.

While CSX shares look well priced, it’s helpful to see how Colleagues from CSX rate on metrics that matter. Other valuable comparisons for companies in different industries can be found at Peer comparisons.

In addition, the Covid-19 crisis has led to many price discontinuities which can provide attractive trading opportunities. For example, you’d be surprised how counterintuitive stock valuation is CSX vs Amerco.

With inflation rising and the Fed raising interest rates, CSX shares are down 7% over the past 12 months. Can it go down even more? See how low CSX shares can go by comparing its fall to previous market crashes. Here’s a performance summary of all stocks in previous market crashes.

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