CSX (NYSE: CSX), a railway company whose peers include Burlington Northern Santa Fe (NYSE: BNI), Union Pacific Corp. (NYSE: UNP) and Norfolk Southern Corp. (NYSE: NSC), reported earnings for the second quarter on Monday after the bell. Net sales declined 25%, and earnings from continuing operations declined 24% to 72 cents per share.
Declines are never nice, but for a company like CSX, it's only to be expected. The recession continues to have an impact on operations. Management said that volumes decreased; it also mentioned how CSX is doing its best to run as efficiently as possible to combat the dropping top line. Maybe it's working out, because according to Reuters, the company beat Wall Street estimates by 10 cents.
When I wrote about CSX's last quarter, I also noted an earnings beat. And my feelings on the stock were this: wait for a pullback to initiate a trading position. Indeed, I felt a sense of momentum with the stock given the recent price action at the time.
Well, I have similar feelings with CSX after reading the Q2 report. No matter what, you have to wait for a pullback. Of course, the decision is always yours, but I think a pullback is even more vital now for success than before. Remember, CSX was benefiting from a more bullish sentiment in the overall markets a few months ago. I'm also getting the feeling that the summer doldrums might be getting ready to settle in and just don't feel as comfortable about CSX's price action. If you take a look at a chart at AOL quotes, you'll see that the last month hasn't been that great.
So, I congratulate CSX on a well-done Q2 -- the company destroyed expectations. But on the question of whether it's a buy, I say no. Shares were up in Monday's after-hour sessions by 0.5%. During the regular session, shares had gained almost 1.6%. I'm not sure where CSX will close today, but if you're set on buying, try to get in at a better price than yesterday's bid.
Disclosure: I don't own any company mentioned; positions can change without notice.
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