CSX Corporation (NYSE:CSX) ended the last trading session with a minor gain of 0.39% after the announcement of its first quarter earnings but more important was the 4% recovery from the intraday low. The volume jumped to 19 million against the average of 8 million, as natural in an earnings announcement day. The stock may have found its short term bottom and a rise towards $37 or $38 can’t be ruled out now.
The first quarter net earnings of CSX Corporation (NYSE:CSX) came at $442 million, which means an increase of 11% against $398 million in the same quarter last year. The earnings per share increased by 13% from the earlier $0.40 to $0.45 now. An improved pricing environment, the benefit of lower fuel prices and cost saving initiatives not only offset higher inflation and volume related costs, it also drove the revenue to $3 billion for the quarter. The operating income came at $843 million, an increase of 14% and the operating ratio saw an improvement by 330 basis points to reach 72.2%.
A new share repurchase program and a 13% increase in the quarterly dividend have been approved by CSX Corporation (NYSE:CSX) Board of Directors. The increased dividend of $0.18 per share will be paid on June 15, 2015 to shareholders of record at the close of business on May 29, 2015. The next 24 months will see the new $2 billion share repurchase completed. The company has already repurchased shares worth about $9 billion in the last decade.
Technically, it looks like a bear trap has sprung into action, trapping a lot of shorts. Just a single EOD closing above yesterday’s high of $33.26 may trigger some serious short covering and initiate a rally to $37-$38 or even a new high. Aggressive investors can buy the stock at current levels with a stoploss below $31.50.
