CSX Beats Estimates, "Reviewing" TCI Letter

17 Oct 10:14am
Posted by ToddSullivan
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What remains to be seen is how these results compare to those of its peers over the next few days. Both Burlington Northern (BNI) and Norfolk Southern (NSC) report next week.

CSX (CSX) recorded net income of $407 million, or 91 cents a share, compared with $328 million, or 71 cents a share, a year earlier. Results include 24 cents from discontinued operations. Year earlier EPS included a 17 cent gain from insurance settlements and the resolution of certain tax issues.

Freight volume fell 4% for the quarter, due to decreased demand for building products. Largest declines were in shipments of forest products, down 13%, and food and consumer goods, down 15%. Revenue per unit rose 8%, led by phosphates and fertilizers where it rose 27% because of "pricing and changes in the traffic mix." Total revenue climbed 3% to $2.5 billion.

Excluding a 24 cent per share gain for one time items, CSX earned 67 cents per share for the quarter, compared with 54 cents in the same quarter of 2006 after excluding 17 cents per share in items. The 67 cents came in above the EPS of 62 cents that Wall Street analysts had expected.

This is going to get real interesting when one considers yesterday's event and the TCI letter that became public. Will management wave these results in the air and tell them to essentially "piss off"? Will they take a "despite these record result, we are considering the proposals of the letter" tact? This has the potential to become very ugly very fast. If it does, do not worry. TCI will get the support it needs from shareholders and in the long run, based on its track record, we will be rewarded for our support.


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About

ToddSullivan

A Massachusetts based value investor, I look for companies whose current valuation is at a discount to their true value. When I purchase a stock, my typical holding period is several years. I consider buying a stock purchasing a piece of a business. I am confident once I make a decision to buy that eventually the market as a whole will recognize the true value of the business and value it accordingly. It may take 1 month, 6 months or a year, but if I buy it at enough of a discount to its true value my results will be (and have been) superior to the market as a whole. Of all the disparate investing disciplines, value investing has stood the test of time. The great investors of have all been value investors. Warren Buffett, Ben Graham, Bill Ruane (Sequoia Fund), Bill Miller and Wally Weitz, all have consistently outperformed the market for decades by using various forms of value investing. Currently I am a contributing writer to Seeking Alpha, Vinvesting.com, The Stock Masters and Value Investing News. Posts have been reprinted in The Wall St. Journal, Yahoo Finance, Google Alerts, Google Finance, TheStreet.com. 24/7 Wall St. and Topix.net.

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