CSX stock is set to report its Q2 2024 results on August 5, with revenues expected to reach $3.7 billion and earnings at $0.49 per share. The company’s performance is anticipated to be slightly ahead of the consensus estimate, benefiting from modest volume gains. However, the average revenue per unit metric may remain soft. CSX’s stock has seen gains of 15% from early 2021 to now, but the increase has been inconsistent, with underperformance compared to the S&P 500 in certain years. The company’s stock has struggled to consistently beat the S&P 500 over the past few years, unlike the Trefis High Quality Portfolio, which has outperformed the benchmark index annually.
In the current uncertain macroeconomic environment with high oil prices and elevated interest rates, CSX’s stock valuation appears to be fully priced at around $35 per share, close to its estimated valuation of $37 per share. The stock is trading at 18x forward expected earnings for 2024, aligning with its average P/E multiple over the last five years. In Q1, CSX saw a 1% y-o-y decline in revenue, with lower fuel surcharges and trucking demand impacting the results. While overall volume increased by 3%, the average revenue per unit fell by 4%. The operating margin also deteriorated by 270 bps y-o-y to 36.8%, leading to a 4% decrease in earnings per share.
For the upcoming Q2 results, CSX is expected to benefit from volume gains in merchandise, although pricing growth may remain modest. The coal segment could face challenges, especially in export coal, following the Baltimore bridge collapse earlier this year. CSX anticipates a favorable overall cost per employee in Q2, which could help improve its margin profile. While CSX stock appears to be appropriately priced, it is essential to evaluate how the company’s peers are performing on key metrics, which can be assessed through Peer Comparisons.
Overall, CSX’s performance in Q2 will be closely watched to see if the company can exceed expectations and deliver solid results amidst the challenging economic environment. With uncertainties surrounding high oil prices and interest rates, investors will be looking to see if CSX can maintain its growth trajectory and navigate potential headwinds in the industry. As the company’s stock valuation remains in line with historical trends, investors will be keen to see if CSX can deliver on its growth targets and maintain its position in the market.
