Did you know that you can trade a New York Stock Exchange-listed stock on Nasdaq?
It’s apparently not a well-known fact and CSX Corp. Chief Executive Officer Michael Ward admitted even he was unaware of that before his company switched its stock listing last month from the NYSE to Nasdaq. He learned that Nasdaq was already involved with CSX before the company was actually listed there.
“Even before the change, about 50 percent of our shares traded on Nasdaq,” he said in an interview last week.
The switch was a cost-savings move for the company. Ward said CSX is saving about $400,000 a year by listing on Nasdaq.
But otherwise, the switch is having basically no impact on CSX’s stock.
However, the weak demand for freight shipments is having a major impact on the railroad industry and CSX stockholders are feeling it.
CSX’s stock fell as much as $1.95 to $21.75 Wednesday, its lowest price in nearly three years, after the Jacksonville-based company not only reported lower fourth-quarter earnings, as expected, but also forecast 2016 earnings will be lower than 2015.
The difficult industry environment, which Ward described as a “freight recession” in the company’s conference call with analysts last week, has been sending CSX’s stock down for the past year.
While that looks bad now, several analysts said after the earnings report they see nowhere for CSX’s stock to go but up.
BB&T Capital Markets analyst Mark Levin on Thursday upgraded his rating on CSX from “hold” to “buy.”
“After falling 28 percent in 2015 and another 14 percent to start the year, CSX shares are valued near their lowest forward multiple in years,” Levin said in his research note.
“It’s also the cheapest of the Class I rails at only 12.4 times our new 2016 estimate of $1.80,” he said.
Levin doesn’t see freight volumes improving in the first half of this year, but he expects CSX management to continue to improve its service, which would position the company well for the future.
“We see 2016 as a year in which everything that could be bad is bad, setting up a brighter outlook for 2017,” he said.
CSX earned $2 a share in 2015 and Ward didn’t say how far below that he expects earnings to fall this year.
Credit Suisse analyst Allison Landry said in a research note she was reducing her 2016 forecast from $1.99 to $1.85 after the yearend report.
“In short, expectations for solid pricing and about $200 million of productivity gains (about half of which is already in the bag) will not be able to overcome burgeoning coal stockpiles, low natural gas prices, broad commodities weakness and the strong dollar,” she said.
However, Landry maintained an “outperform” rating on the stock.
Stifel analyst John Larkin reduced his earnings forecast from $2.05 to $1.85 after the earnings report, but he also maintained a “buy” rating.
“We calculate that our 12-month target price offers 25.3 percent upside potential over the coming 12-months when the company’s 3.0 percent dividend yield is included, which is more than a sufficient amount to reiterate our buy rating,” Larkin said in his research report.
Freight trends affecting Landstar
The freight recession that Ward described is not only impacting the railroads, but it also obviously affects trucking companies like Landstar System Inc.
William Blair analyst Nate Brochmann last week downgraded Jacksonville-based Landstar and two other trucking companies as part of an overall gloomy outlook for the transportation industry.
“We admit we are late to the party, but we had held out hope there might have been some stronger lift to peak season demand and that consumer spending would win the day after seeing softer trends since May. Unfortunately, it is time to capitulate on the U.S. macroeconomic environment, which now looks like it will remain sluggish at best, before ultimately seeing what has been a slow growth cycle end,” Brochmann said in his report.
He downgraded Landstar, along with Knight Transportation Inc. and Roadrunner Transportation Systems Inc. to “market perform.”
“Our primary concern with Landstar is its approximate 30 percent of revenue tied to the industrial sector via its platform niche. Also, solid market share gains in 2015 within its dry van operations could create a more challenging comparison in 2016,” he said.
Brochmann did say he likes Landstar for the long term.
“However, we do not see the industrial economy picking up in the near term and see the name as potentially range-bound over the next 12 months,” he said.
Latitude 360 details settlement
After closing its entertainment and restaurant venues in Jacksonville and Indianapolis two weeks ago to settle a lawsuit, Latitude 360 Inc. provided details of the settlement in a Securities and Exchange Commission filing.
Latitude 360 was facing an eviction lawsuit filed by the owner of the two properties, an affiliate of real estate investment firm EPR Properties.
According to the SEC filing, in addition to vacating the properties, Latitude 360 agreed to pay $250,000 plus all utilities and property taxes that had accrued.
The landlord released Latitude 360 from about $6.8 million in debts owed, it said.
Latitude 360 continues to operate with a headquarters office in Jacksonville and one remaining entertainment and restaurant venue in Pittsburgh.
Publix promoting Todd Jones to CEO
Publix Super Markets Inc. last week named a former Jacksonville executive as its new CEO.
Todd Jones, currently president of the Lakeland-based supermarket chain, will become chief executive officer April 30 upon the retirement of CEO Ed Crenshaw, Publix announced Wednesday.
Jones is a Publix lifer, having started in 1980 as a front-service clerk in a New Smyrna Beach store. He gradually worked his way up the ranks, including a stint as vice president of the Jacksonville division from 2003-05. He became president of the company in 2008.
Crenshaw also worked his way up at Publix, starting in 1974, and became CEO in 2008. As he retires from that role, he will become chairman of the board. Current Chairman Charlie Jenkins will become chairman emeritus.
Foley’s title changes at Fidelity
Bill Foley’s title at Fidelity National Financial Inc. is changing, but apparently not his role.
Foley had been executive chairman of the Jacksonville-based company but as of Jan. 8, he gave up his position as an executive officer, according to an SEC filing. Foley is remaining as non-executive chairman of the board.
Although his title changed, his involvement with Fidelity is not changing, said Dan Murphy, senior vice president and treasurer.
At the same time as Fidelity’s filing, Black Knight Financial Services Inc. said in an SEC filing that Foley is continuing to serve as executive chairman of that Jacksonville-based company, which was spun off from Fidelity last year.
Foley is also vice chairman of Fidelity National Information Services Inc., or FIS, which was spun off from Fidelity National Financial in 2006.
Analyst upgrades FIS
While the overall stock market has been down recently, FIS’ stock has done even worse than the rest of the market. That prompted Wells Fargo Securities analyst Timothy Willi to upgrade his rating on FIS last week.
“We are upgrading shares of FIS to ‘outperform’ from ‘market perform,’ as we believe the sell-off over the past two months (-21 percent versus S&P 500 -9 percent) leaves shares attractively priced relative to the peer group and to our discounted cash flow model, which indicates a fair value of $70,” Willi said in his report.
FIS was trading at $58.94 when he issued the report.
“While certain question marks around the macro environment give us room for pause (on a near-term basis), we believe that ultimately the company enjoys a solid competitive position and that the recently completed SunGard acquisition provides strategic benefits as well as increased earnings visibility in 2016 and 2017,” Willi said.
“Further, the company’s business model is somewhat defensive in nature, serving primarily upmarket financial institutions under long-term contracts which generate highly recurring revenue streams. With a strong cash flow profile, FIS also represents a solid capital return story — we expect substantial share repurchase (over the longer-term) along with an increasing dividend payout ratio to underpin the stock in the event of a market downturn,” he said.
Regency Centers’ forecast in line
Regency Centers Corp. last week provided a 2016 forecast that was in line with analysts’ expectations.
The Jacksonville-based shopping center developer expects core funds from operations between $3.20 and $3.26 per share this year.
Analysts had been forecasting anywhere between $3.18 and $3.30, according to Thomson Financial.
Funds from operations are basically earnings excluding depreciation and amortization expenses and are considered the key earnings metric for real estate investment trusts like Regency.
Regency expects its final core funds from operations for 2015 to be between $3.02 and $3.04 a share.
Tegna renews NBC agreement
Tegna Inc. on Thursday announced it renewed the network agreement for all of its 17 NBC-affiliated stations, which includes WTLV TV-12 in Jacksonville.
Tegna (formerly Gannett Co. Inc.) said the deal brings all of its NBC stations under one common long-term agreement. It did not say how long the agreement will last.
According to its annual report last year, WTLV’s affiliation agreement with NBC was scheduled to expire in 2017.
Tegna also owns Jacksonville ABC affiliate WJXX TV-25. WJXX’s affiliation agreement is scheduled to expire in 2018.
Tegna owns a total of 46 stations in 23 states.