CSX Corporation (CSX) is expected to grow its earnings per share 21.5% in 2010, 19.2% in 2011, and 10.4% over the next three to five years. The stock also offers investors a dividend yield of 1.8%.

This Zacks #2 Rank stock trades at 15.8x 2010 consensus EPS estimates and 13.3x 2011 consensus EPS estimates.

Company Description

CSX Corporation provides rail-based transportation services in North America. These services include traditional rail service, and the transport of intermodal containers and trailers.

First-Quarter Results

Revenue rose 11% to almost $2.5 billion. The company indicated that it benefited from increasing demand and the economic recovery. CSX Corp.0 increased its operating income 21% thanks to its operating margin expanding to 25.5% from 23.2% in the first quarter of 2009.

CSX earned $0.78 per share, beating the Zacks Consensus by 9 cents, or 13.0%. In the last five quarters, CSX Corp. has beaten the Zacks Consensus Estimate by an average of 9.5%.

Chairman and CEO Michael Ward said, “We’re encouraged by what we see in the external environment as the industrial economy continues to gain momentum.” He also said that the company should deliver strong double-digit earnings growth for the rest of 2010.

Estimates Charging Higher

After CSX reported strong first-quarter results, analysts started upping their estimates for this year and next.

In the last seven days, there have 47 upward revisions to CSX’s annual EPS estimates. Those revisions pushed the 2010 Zacks Consensus higher by 22 cents, or 6.7%, to $3.49 and the 2011 Zacks Consensus higher by 21 cents, or 5.3%, to $4.15.

Balance Sheet

CSX Corp. ended the first quarter with about $1 billion in cash and equivalents and debt-to-equity ratio of 0.8. Given the large capital requirements of the business, CSX Corp.’s balance looks stable.

The Chart

During the market’s sell-off in February, CSX shares declined by almost 13%. However, the stock has rebounded nicely. It is up over 31% from its February lows and up 14.5% year-to-date.


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