csx corporation Long
CSX Corporation, together with its subsidiaries based in Jacksonville, is one of America’s leading transportation suppliers. The company’s rail businesses provide rail-based transportation services including traditional rail service and the transport of intermodal containers and trailers. Overall, the CSX Transportation network encompasses about 20,000 route miles of track in 23 states, the District of Columbia, and the Canadian provinces of Ontario and Quebec. Their transportation network serves some of the largest population centers in the nation. Nearly two-thirds of Americans live within CSX’s service territory. Now, I personally don’t know anything about rail companies, however, I’m considering that as an advantage as I’m assuming a typical investor also wouldn’t. The reason why I believe this to be an advantage is unlike other companies, there aren’t any people investing in it just for the fun of it. The type of people I assume who have a sizable amount of share in this company are the ones who have a very knowledgeable idea of the company and its strategies and are into it for the long run otherwise if it was just an average investor who just wanted to put his money somewhere without any research they would have most likely chosen a much better-known company such as Apple. Another advantage about these unknown company is the fact that they don’t have any haters trying to short it. Even in a worst case scenario if the company comes out with a bad report, it will mostly just be people who already had their money into the company selling their shares rather than other people trying to short it. Adding more, I can’t really see how a rail company would expect a bad outlook as they’re in a completely different business sector with different customers. They don’t have the typical customers that a bank or a grocery would have and I assume their customers have no other choice but to use their services. Something else about this sector is that there is very minimal competition in it so they don't have any big rivals taking revenue away from them. They are also the biggest in this industry so I don’t think the environment that we are in right now will have any effects on them as railway services are an essential part of society. One reason why I could be wrong is that the government right now is focusing on other things and lowering their budget for rail way services considering the problems they are facing right now. The high cost of labor and business expenses will have also definitely had an effect on them which could cause them to miss the revenue estimates.
Investors opinions:
Over the last 3 months, EPS estimates have seen 10 upward revisions and 5 downward. Revenue estimates have seen 12 upward revisions and 4 downward.
The company just expanded north its network, with the $601 million acquisition of Pan Am Systems that was approved in April and completed in June. Through this operation, CSX strengthens its network in New York, Connecticut and Massachusetts, while adding Vermont, New Hampshire and Maine to its network.
CSX is focusing on chemicals and its acquisition of Quality Carriers, the largest liquid bulk chemicals trucking carrier in North America that operates over 2,500 trucks and 6,400 trailers, enabled it to offer shippers the first integrated intermodal chemical transportation solution of its kind.
Railroads are businesses that have a long history, reaching back almost 200 years for some companies. This is an industry that moves at a slow pace, with a lot of investments but a considerable moat. Furthermore, it has been able to go through very different economic environments without being wiped out.
The key metric here is the operating ratio. The lower, the better. CSX reported an operating ratio of 55.4% in Q2 2022, while it was at 55.3% at the end of 2021. Its main competitor Norfolk Southern performs worse with a 60.1% operating ratio, close to Canadian Pacific's 59.5% and Canadian National's 59.3%.
Report time: Today after the market closes
Expected movement: +4%
P/E Ratio: 15.13
Market Cap: 57,813,510,672