Benzinga  Sep 5  Comment 
Railroad operator CSX Corporation (NASDAQ: CSX)'s fundamentals remain strong, but a not-so-attractive valuation has sent BMO Capital Markets to the sidelines. The Analyst Analyst Fadi Chamoun downgraded CSX from Outperform to Market Perform...
SeekingAlpha  Sep 5  Comment 
Yahoo  Aug 24  Comment 
Is (CSX) Outperforming Other Transportation Stocks This Year?
Yahoo  Aug 14  Comment 
Bull of the Day: CSX Corp. (CSX)
Motley Fool  Aug 10  Comment 
The month of July alleviated a big fear that investors in CSX were hanging on to.
Yahoo  Aug 10  Comment 
CSX Corp's (CSX) efforts to reward shareholders through dividend payments and buybacks are encouraging. Also, the company is benefiting from the Precision Scheduled Railroading system.
Benzinga  Aug 9  Comment 
Up to two-thirds of intermodal service between CSX and UP face disruption.  Union Pacific Corporation (NYSE: UNP) customers sending freight east of the Mississippi have fewer options as the west's  main rail line blames changes on the part of...
SeekingAlpha  Aug 3  Comment 
Insurance Journal  Aug 1  Comment 
Federal officials have announced a $2.2 million proposed settlement with CSX Transportation to resolve the company’s liability for water pollution violations stemming from a train derailment that caused an oil spill in West Virginia. The U.S....
Yahoo  Jul 26  Comment 
The strong earnings report issued last week by CSX Corporation (NASDAQ: CSX) is reverberating through the quarterly release of class 1 railroad earnings, which is now at an end. Last week, CSX reported an operating ratio of 58.6 percent....


CSX Corporation (NYSE:CSX) is one of the nation's leading transportation companies. CSX's 30,000 employees operate a rail network comprised of more than 21,000 miles of track, 4,100 locomotives, 216,000 freight cars, and nearly 33,000 intermodal units.[1] The company transports everything from chemicals to automotive parts. Its main divisions are Merchandise, coal , Intermodal (a combination of rail and truck transportation), and Automotive. The company earned $9 billion in revenue and $1.1 billion in net income in 2009.[2]

Like its counterparts in the railroad industry, CSX is subject to economic cycles. When the economy is doing well, more goods tend to be shipped, and when the economy is doing poorly, fewer goods tend to be shipped. Moreover, the volume of goods being shipped by a particular industry tends to vary directly in proportion to the health of that industry. For instance as housing markets have declined, the demand for the transportation of housing related goods has also decreased. As the price for a barrel of crude oil rises, diesel fuel and trucking becomes much more expensive. Rail prices are much less sensitive to fuel costs, and a massive movement to rail-based transport developed. Volume has exploded the last two quarters for this sector.

Although CSX has made progress in some areas, it still lags its competitors in key performance areas such as train speeds, on-time arrivals and departures, accidents, and re-crews. This is largely due to the complexity of CSX's rail road system. The company's current incarnation is the result of a merger of two separate railroads. CSX also acquired a significant interest in Conrail in 1997; the integration of these three networks results in more operational difficulties than its competitors. As a result of these operational lags to its competitors, hedge funds TCI and 3g Partners acquired large stakes in the company and launched a proxy battle to secure seats on the board of directors.

Business Growth

FY 2009 (ended December 25, 2009)[2]

  • Net revenue fell 20% to $9 billion due to declines in volume and lower fuel surcharge revenue which more than offset core pricing gains.
  • Net income fell 24% to $1.1 billion.

Trends and Forces


As with all transportation industries, the price of oil and other fuels have a tremendous impact on CSX's bottom line. A decrease in fuel hedge benefits, coupled with higher diesel prices directly increase CSX's expenses. According to CSX, approximately 85% of its revenue is subject to fuel surcharges or price increases.

Derailments & Accidents

Derailments are a common expense for railroads but the magnitude of the accident can have a significant impact. In addition, because railroads are required by law to transport hazardous materials, there is a possibility of future derailments of this magnitude.

Legislation & Regulation

Railroads are subject to various regulations from multiple government departments, all of which could significantly impact business should they choose to change any of the current regulations. Railroads, and the domestic transportation infrastructure in general, are vulnerable to terrorist attacks and as such, federal, state, and local governments are adopting legislation that will strengthen security. In conforming to new regulations, CSX would undoubtedly incur extensive expenses.[3]

Network Difficulties

CSX is the product of a merger of two separate railroads and has also acquired a 42% economic interest in Conrail. Ensuring the compatibility of these three networks is a difficult task and a constant hindrance to improving train speeds and other operating metrics. The network is also subject to natural disasters, such as Hurricane Katrina, which resulted in more than $170 million in insurance claims. CSX currently spends an average 13%-14% of annual revenue on capital projects, primarily on track maintenance as opposed to expansion.


Most of the 30,000 employees belong to labor unions, making CSX's relationship with the unions of utmost importance. The rail industry has been fortunate in the past, almost always reaching an agreement during negotiations before a strike becomes necessary. In the last thirty years, there were only six days of work stoppage due to labor negotiations.[4]


Like other rail lines, CSX directly competes with the trucking and shipping industries. Trains are three times more fuel-efficient than their trucking competitors, but have less short-haul flexibility. As shipping imports from Asia continue to increase, analysts expect increased volume at many East Coast ports because West Coast ports already experience heavy congestion. Higher volumes flowing through the Suez and Panama canals also seem to support this assumption. In the rail industry, CSX's main competitor is Norfolk Southern (NSC), another East Coast rail line. CSX maintains a larger rail network, but Norfolk Southern consistently tops CSX in two of the three the main operating metrics: Train speed and average dwell time (the average time a car resides at the specified terminal location); CSX consistently has more cars online. Norfolk Southern also has a significantly better operating ratio (operating expenses / operating revenue) than CSX - 72.8% vs. 77.8%.


  1. CSX 2009 10-K "CSX Rail Network" pg. 18-21
  2. 2.0 2.1 CSX 2009 10-K "Selected Financial Data" pg. 27
  3. CSX 2009 10-K pg. 11
  4. CSX 2009 10-K pg. 12
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki