(The following column by Andrew Leckey appeared on the Chicago Tribune website on July 5, 2009.)
Q:I own shares of CSX Corp. and wonder what I can expect next.
A: Though the giant railroad with 21,000 miles of track in 23 Eastern states has improved the efficiency of its operations in recent years, there’s no escaping the bad economy.
The third-largest U.S. railroad by revenue expects double-digit declines in shipping volume to continue for a while, considering it carries goods such as autos, metals and forest products, which are off significantly.
Shares of CSX (CSX) are up 2 percent this year after last year’s 26 percent decline and gains of 28 percent in 2007 and 36 percent in 2006. The company’s first-quarter net income fell 30 percent from a year earlier, including one-time items, but it beat expectations because of cheaper fuel and cost reductions.
Analyst recommendations on CSX shares, according to Thomson Reuters, consist of three “strong buys,” six “buys,” nine “holds” and one “underperform.”
Despite declining volume, the largest railroads were able to raise their prices and enact fuel surcharges last year, which didn’t please their customers.
CSX earnings are expected to fall 19 percent this year versus a 32 percent drop predicted for the industry. Next year’s projected 12 percent rise compares to a 23 percent gain for the industry. The five-year annualized growth rate is expected to be 10 percent for it, 11 percent for its peers.