CSX shares (NASDAQ: CSX) have risen 59% since the end of March (compared to approximately 53% of the S
How did CSX inventory replace the 2008 recession?
We believe that CSX inventories increased from grades of approximately $11 in October 2007 (the pre-crisis peak) to about $7 in March 2009 (while markets have reached a low), implying that inventory has lost up to 42% of its pre-crisis peak price, marking a smaller decrease than that of the S
However, CSX recovered strongly after the 2008 crisis to around $13 in early 2010, a 100 percent increase between March 2009 and January 2010.
By comparison, CSX shares lost 34% of their value between the top of the market on February 19 and the lowest on March 23, and have already recovered by 59% since then.
Is recovery justified and can we expect additional gains?
The uptick between sectors in recent weeks can basically be attributed to the Fed’s stimulus, which has largely dispelled investor considerations about short-term business survival. The flattening of Covid’s instances in the most affected US and European cities also provides confidence to investors that evolved countries have put the worst in the pandemic on them.
CSX’s specific business has been affected because many business sets are operating at limited capacity, and the specific automotive sector has been the maximum segment affected for transportation companies. and have an effect on coal demand, which fell further during the pandemic with even a decrease in demand for coal, and this will probably also be the long-term trend.
So far in 2020, CSX has noticed a 16% drop in revenue, the peak commonly driven by a 42% drop in the transport of goods by car and 37% in coal transport, while other segments have done well. behaved with a low single-digit drop in freight. because a decline in sales for many corporations is imminent in 2020 given the pandemic. CSX’s earnings fell 21% to $1. 65 consistent with the consistent percentage for the semester consistent with the period ended June, from $2. 10 in the previous year consistent with the period. The fall in profits was more pronounced than that of income, due to the contraction in margins, as volume declined and constant prices remained the same. Looking ahead, with the slow reduction of lockouts and factories incompatible with a capacity-consistent increase, CSX volume is likely to increase to the maximum, contributing to freight revenue and short-term margins.
In the coming weeks, we expect continuous improvement in the call and moderate expansion in the number of new Covid-19 instances in the United States to be placed on the market. While the effects of the third quarter are expected to be greater than the effects of the quarter of the moment, investors will focus on the 2021 effects, helping CSX return to pre-crisis levels, about 6% above existing market prices. .
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