What Is Driving CSX Corporation (NASDAQ: CSX) Stock?

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CSX Corporation (NASDAQ: CSX) stock rose over 5% on 22nd October, 2020 (as of 9:57 am GMT-4 ; Source: Google finance) after the company posted decent results for the third quarter of FY 20. CSX in the third quarter of FY 20 has reported the adjusted earnings per share of 96 cents, beating the analysts’ estimates for the adjusted earnings per share of 92 cents. The company had reported 11 percent fall in the adjusted revenue to $2.65 billion in the third quarter of FY 20. There has been 3% decline in the volume during the period. CSX reported operating income of $1.1 billion, reflecting a 56.9% operating ratio. On a year-to-date basis, capital investment is roughly flat. Through the third quarter, the company had generated free cash flow before dividends of $1.9 billion down 30% versus prior year, driven by lower operating income, but also including impacts from lower proceeds from property dispositions.

Despite the challenge, the company has authorized spending an additional $5 billion on share repurchases. That adds to $1.1 billion CSX currently has available for buybacks. The company reported a quarterly profit of $736 million down from $856 million for the year-earlier period. Further, despite the challenges, the railroad continues to run at a high-level. Planned changes enacted in the second quarter drove strong productivity gains across the system. The company has further balanced the network and set a new quarterly record of 93 distributed power trains per day, averaging over 100 distributed power trains per day for the last two months of the quarter. Yard productivity also increased due to blocking cars further upstream, reducing touches in the yards and finding new ways to be more dynamically share work between yard and local trains.

Moreover, merchandise revenue fell by 7% and 5% lower volumes with all end markets experiencing volume declines. Intermodal revenue was flat on 7% higher volumes, due to growth in both domestic and international volumes from inventory restocking and a tightening truck market, were all mostly offset by declines in fuel surcharge revenues. Coal revenue fell 36% and 27% lower volumes, as the coal business continues to be negatively affected by reduced electrical demand, lower industrial production and lower global benchmark prices. Other revenue had fallen 12% due to lower affiliate revenue and declines in demurrage charges.

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