Earnings Preview: CSX railroad's 3Q report

JACKSONVILLE, Fla. -- CSX Corp. will be the first major freight railroad to release third-quarter earnings when it reports next week, so investors will be looking for clues about the health of the industry and the economy.

WHAT TO WATCH FOR: Railroads have moved less coal this year because of last year's mild winter and the cheap natural gas prices that have inspired some utilities to shift from burning coal to natural gas.

Railroad stock prices tumbled last month after Norfolk Southern said lower coal shipments and a decline in fuel surcharge revenue caused it to earn less than analysts expected in the third quarter. The warning sent Norfolk's shares down 9 percent in one day and raised concern about other railroads.

Credit Suisse analyst Christopher Ceraso said most of the shortfall Norfolk Southern forecast is caused by company-specific issues that shouldn't affect other major freight railroads like CSX. But he said railroads may still be hurt by higher fuel prices and sluggish shipping volume in the quarter.

CNX reports next Tuesday after the close of trading on Wall Street. Union Pacific Corp., the biggest railroad in the U.S., will release its third-quarter results two days later on Oct 18.

WHY IT MATTERS: Major freight railroads' results are considered gauges of the nation's economic health. Railroads carry cars, chemicals, crops, lumber and containers of imported goods across the nation, so their earnings reflect the condition of many industries. CSX, based in Jacksonville, Fla., operates over 21,000 miles of track in 23 eastern states and two Canadian provinces.

WHAT'S EXPECTED: Analysts surveyed by FactSet expect CSX to report earnings of 44 cents per share on revenue of $2.95 billion.

LAST YEAR'S QUARTER: CSX reported $464 million net income, or 43 cents per share, in last year's third quarter. The railroad was able to increase shipping rates on most goods it carried enough to offset sluggish volume growth last year. That helped it increase revenue 11 percent to $2.96 billion.