CSX Corporation (NASDAQ:CSX) has come under pressure in recent days after powering to record highs at the start of the year. Amid the pullback, the stock is still up by more than 40% since clocking one-year lows as the overall market came crashing in March of last year.
Q4 Results
The rally has coincided with an uptick in investor’s sentiments about the company’s long term prospects and ability to generate shareholder value. Likewise, the company is fresh from reporting impressive quarterly earnings that topped estimates and likely to fuel a bounce back to all-time highs after the recent pullback.
The railroad company generated net earnings of $760 million or $0.99 a share in the fourth quarter. In the quarter, the company incurred a charge of $48 million or 0.005 a share. The operating ratio rose to record highs of 57% as the company continued to shrug the COVID-19 shocks that triggered operating challenges. Operating income was up by 5% to $1.22 billion compared to $1.15 billion reported last year.
However, revenue was down by 2% in the quarter to $2.83 billion. Intermodal growth was offset by lower fuel surcharge revenue and coal declines. CSX Corp trimmed its operating expenses by 7% to $1.61 billion, helped by lower fuel expense and efficiency gains.
Buybacks And Dividends
CSX Corp's impressive run in the market can be attributed to, among other things, its commitment to returning value to shareholders. Amid the COVID-19 headwind, the railroad company could still repurchase 10 million shares, conversely returning $664 million to shareholders.
The board has since committed to buying additional shares worth $5 billion as part of a new buyback program. This is in addition to about $1.1 billion remaining in the existing share repurchase program.
In addition to buybacks, CSX Corp has also hiked its dividend by 8%, all but affirming its value-generating capabilities. Similarly, it does not come as a surprise that investors are increasingly buying the stock in view of the buybacks and the dividend yield on offer.