Earnings Results: CSX rallies on earnings beat, while Union Pacific stock lags

by | Oct 20, 2022 | Stock Market

Rival rail operators CSX Corp. and Union Pacific Corp. on Thursday both reported third-quarter results that beat estimates, helped by higher prices and the fuel surcharges they tack on to offset fuel prices. But different outlooks for both companies sent their stocks in opposite directions. Union Pacific
whose operations are focused on the Western two-thirds of the U.S., cut its outlook for carload growth on Thursday morning, saying “markets are softening a bit.”

But after the market close, CSX
whose rail network covers much of the nation east of the Mississippi River, stuck with its full-year sales outlook for double-digit growth, excluding impacts from a real-estate transaction in Virginia. “Ultimately, results were a bit better than expected, which is positive, and following challenging 4Q guidance from Union Pacific, shares should react favorably assuming CSX can avoid a similar step down,” Citi analyst Christian Wetherbee said in a note following CSX’s results. CSX and Union Pacific reported earnings as large rail operators try to lock down a deal with rail-worker unions to avert a strike, and as Wall Street frets over freight demand and a possible recession. And after years of trying to keep costs lean amid a decline in coal usage and greater competition from trucking, railroads have tried to hire more people to increase crew sizes in an effort to improve service. Along with a possible recession, Wall Street has worried that higher wages and other concessions from new labor contracts would hurt profits. Some analysts late last month have also said rail stocks “aren’t yet priced for a freight recession.“ CSX was up 4.1% after hours. Union Pacific crept 0.2% higher after the bell on Thursday. But it finished regular trading 6.8% lower, after the release of its results. For Union Pacific, net income rose to $1.90 billion, or $3.05 a share, from $1.67 billion, or $1.07 a share, in the prior-year period. Adjusted earnings per share of $3.19 came in above FactSet consensus of $3.06. Revenue rose 18% to $6.57 b …

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