• NASDAQ:CSX Stock and Profitability Discussion

  • Discussion of the operations of CSX Transportation, from 1980 to the present. Official site can be found here: CSXT.COM.
Discussion of the operations of CSX Transportation, from 1980 to the present. Official site can be found here: CSXT.COM.

Moderator: MBTA F40PH-2C 1050

  by Jeff Smith
DISCLOSURE AND ADMIN NOTE: This thread is for the discussion of CSX Stock, profitability, etc. RAILROAD.NET makes no representation or warranties as to the prospects of this stock or company; all risk is aed by investors only. Publication of insider information is punishable under law. The views expressed herein are thoCSX se of the member only.
  by Jeff Smith
CSX Leads Industrial Earnings Off the Rails

It’s going to be unbearably hot across much of the U.S. this weekend, but the early returns on industrial earnings have been decidedly cool. A nearly 30% run in CSX Corp. shares heading into its second-quarter earnings report suggested this was a company where investors thought they could find shelter amid a growing body of worrisome manufacturing data. They were wrong. The shares slumped more than 10% the day after CSX reversed a forecast for low single-digit growth in revenue this year and predicted instead that revenue would dip as much as 2%. The East Coast railroad says it’s being cautious, but the time for conservatism is when you start the guidance-giving process, so that strikes me as an inadequate explanation for such a deep cut. CEO James Foote said the macroeconomic backdrop was one of the most “puzzling” he’s ever experienced and that there are no concrete signs of improvement in weak coal, intermodal and industrial volumes.
  by mmi16
It seems like in the march to PSR - with EHH and then Foote showing the door to the prior institutional knowledge of CSX - the institutional knowledge of the Finance Department has left the building and the replacements have not learned the former's pencil sharpening techniques so the CSX ALWAYS beat 'The Street' on the financial estimates.

Bad quarters are to be expected from time to time - to not 'beat the street' is a failing of monumental proportions.
  by Jeff Smith
The Fool's take: Fool.com (Motley Fool)
Is CSX a Buy?
It was a disappointing set of earnings, but is the stock worth buying now, or should investors dump it?

What moves CSX stock
Railroad stocks are cyclical and always will be, and their revenue will follow trends in the economy. However, in recent years, the wide-scale adoption of Precision Scheduled Railroading (PSR) has led to significant improvements in profitability.

In a nutshell, PSR is a set of principles whereby railroads tend to run fixed scheduled trains from point A to point B rather than a hub and spoke approach. Even though CSX's revenue growth is undoubtedly going through a cyclical slowdown, PSR has brought about significant improvements in its operating ratio (operating expenses divided by revenue, therefore a lower number is better), and that's helping to counteract weakness in revenue growth.

The impact of these productivity improvements (train velocity increased and terminal car dwell was reduced -- both positives) can be seen in the reduction in operating expenses during the second quarter. Ultimately, this helped CSX offset a fall in revenue and meant the railroad could increase its operating income in the quarter.