Out Fox The $treet

CSX beat Q3 EPS estimates while missing revenues yet again. The company remains on pace for negative trends despite help from lower share counts. The recent rally in the stock already prices in any potential upside from higher earnings in 2017. After the close,  CSX (NYSE: CSX )   reported  the traditional earnings beat and revenue miss. The railroad operator has a history of strong operations even despite the multi-year headwinds in the macroeconomic and specifically the energy sector. Read the full article on Seeking Alpha.  Disclosure: No position. Please review the disclaimer page for more details. 

The purpose of a stock buyback plan should be to utilize excess cash to buy a significantly undervalued asset. In this case, the undervalued asset is the stock of the company involved. In order to even announce a buyback, the stock should be significantly cheap on a historical basis and future earnings expectations. For the stock to be significantly cheap, the company should be in a position that existing cash more » Disclosure: Long CSX. Please review the disclaimer page for more details. 

An amazing thing in the market are stocks such as Kansas City Southern (NYSE: KSU ) that are suddenly worth an amazing value such as $10 billion. How many social media stocks or recent IPOs does the market obsess about with market caps hardly above the $1 billion level? Railroads have been hot for years and Warren Buffett has already collected Burlington Northern for his Berkshire portfolio, yet how many people more » Disclosure: Long CSX. Please review the disclaimer page for more details. 

After a great 2012 in the pipeline business, Plains All American Pipeline, L.P. (PAA) completed a transaction to increase the focus on rail transportation growth. The company finalized a $500M deal to acquire several loading facilities for railroads though the existing enterprise value of nearly $22B limits the impact of this rail move. Plains All American engages in the transportation, storage, terminalling, and marketing of crude oil, refined products, and liquid petroleum gas (LPG) products in the United States and Canada. The move highlights the transformational currents under cutting the pipeline business. As crude oil has been unable to transverse the current pipeline system to reach the refineries on the coasts, the railroads have stepped up with more direct routes that bypass the congested Cushing, OK oil hub. Not only is it a boon to railroads struggling with weak coal shipments, but exploration and refinery companies are access to better pricing than currently available. R...

CSX Corporation (CSX) has a been a mainstay stock in our Net Payout Yields model for over a year now. The company has a solid 2.5% dividend and has had a huge buyback plan that included over $1B worth of stock purchased in Q311 alone. Earnings After the close on Tuesday, one of the leading railroad operators reported earnings of $0.49 that slightly beat estimates of $0.47. The number also was a 7 percent year-over-year improvement even though the actual earnings amount only increased from $506M to $512M. In essence, the whole gain per share came from the reduction of diluted shares outstanding from 1,109M in Q211 to 1,043M in Q212 or a 6% drop. Read the full article at Seeking Alpha. Disclosure: Long CSX (for now). Please review the disclaimer page for more details. 

The railroad stocks like CSX ( CSX ) have been out of favor for awhile because of declining shipments. CSX though continues to maintain a 2.8% dividend while attractive, its not overwhelming in this environment where stocks move up or down by 20% sometimes in a day. We like to look at the Net Payout Yield as its been deemed more reliable in studies as a predictor of a stocks potential. View my old articles for more detail. The stock buyback portion of the Net Payout Yield makes this stock more enticing. For 2008, CSX bought back $1.5B of net stock. For a company with a current market cap of $12.1B thats an impressive amount. Unfortunately for Q109, CSX didn't purchase any stock with the turmoil in the markets. That leaves the trailing 12 month buyback at $1.2B or 10% of the current market cap for a whopping yield of 10%. Combine that with the 2.8% dividend and the Net Payout Yield is an impressive 12.8%. Obviously CSX will need to get back to buying up stock for this yield to remai...