Following J.B. Hunt's (JBHT, Financial) strong Q3 earnings, expectations were high for CSX (CSX, Financial). However, CSX missed EPS estimates and reduced its Q4 volume and revenue growth forecasts. The company now anticipates a moderate revenue decline with modest volume growth, revising its earlier mid-single-digit growth projection for 2H24.
- CSX's intermodal business saw revenue drop by 2% to $509 million, with volume growth slowing to 3% from last quarter's 5%. The Q4 outlook predicts slower year-over-year growth due to seasonality and a weak domestic trucking market.
- Coal demand remains weak due to low natural gas prices and a sluggish steel industry. Coal volume decreased by 2% this quarter, following a 3% drop last quarter, impacting revenue negatively by 7%.
- Merchandise volume increased by 3%, driven by new business wins and stability in markets like chemicals, ag/food products, auto, and forest products, despite recent hurricanes.
- CSX's EPS grew 12% year-over-year to $0.46, with operating margin improving by 180 basis points to 37.4%, aided by lower fuel and PS&O expenses.
Overall, CSX's performance was stable given the challenging macroeconomic conditions, but growth remains subdued. This performance does not inspire much optimism for peers like Union Pacific (UNP, Financial), Canadian Pacific Kansas City (CP, Financial), and Norfolk Southern (NSC, Financial), who will report their earnings soon.
