CSX's Unsurprising Surprise

For a few months now, I have had a standard response to the skeptics of the economic recovery, and it goes something like this. "If the recovery is not real, and if the recovery is stalling out, why are the railroad shipments still strong?" That point was driven home again with strong results from Eastern railroad operator CSX (NYSE:CSX).  

The Quarter That Was 
By virtually any metric, CSX had a very strong quarter. Revenue was up 22% over last year, as both volume and pricing were strong. Volume (as measured by carloads) climbed about 13% from last year, while pricing (revenue per carload) rose about 8% over the same time period. Revenue of $2.7 billion exceeded the average estimate, which makes the source of the surprise pretty apparent - since the company reports intra-quarter volumes frequently, it was the pricing that was the strongest surprise.

CSX's results gained strength on down through the income statement. Reported earnings jumped 36%, while profits from continuing operations jumped 47%. The operating ratio also improved; the reported number of 71.2%. Assuming that is accurate, that is not only a 340 basis point improvement from last year, but I believe it is the best level the company has posted since the 1999 split-up of Conrail with Norfolk Southern (NYSE:NSC). That is an impressive sign of improvement in a metric where CSX has long been a laggard. (For more, see Ratio Analysis Tutorial.) 


For the complete piece:
http://stocks.investopedia.com/stock-analysis/2010/CSXs-Unsurprising-Surprise-CSX-NSC-UNP-BRK.A-VMC-OLN-ACI0714.aspxC