What’s Next For CSX Stock After A Mixed Q4?

CSX (NYSE: CSX) recently reported its Q4 results, with revenues missing and earnings meeting the street estimates. The company reported revenue of $3.54 billion and adjusted earnings of $0.42 per share, compared to the consensus estimates of $3.57 billion and $0.42, respectively. The GAAP bottom line of $0.38 was impacted by a one-time goodwill impairment charge of $0.04 per share. The overall results were also impacted by the hurricanes and a bridge outage.

CSX stock is down 4% since the beginning of 2024, underperforming the S&P500 index, up 28%. If you want upside with a smoother ride than an individual stock, consider the High-Quality portfolio, which has outperformed the S&P, and clocked >91% returns since inception.

CSX’s revenue of $3.54 billion in Q4 was down 4% y-o-y, as a 1% rise in volume was more than offset by a 5% fall in average revenue per unit (ARPU). Much of this can be attributed to coal freight, which was down 20%, amid a 7% fall in volume and around 14% drop in ARPU. A decline in coal exports as well as domestic coal is weighing on the company’s performance. Furthermore, a 34% plunge in fuel surcharge revenue also hampered the top-line.

Looking at profitability, CSX’s operating ratio deteriorated by 140 bps to 65.7% in Q4. Revenue decline clubbed with margin contraction resulted in earnings declining 7% to $0.42 per share. Looking forward, CSX will likely continue to face headwinds for its coal freight in the near term.

What Does This Mean For CSX Stock?

A mixed Q4 didn’t sit well with the investors, and CSX stock dropped 4% post its results announcement. Looking at a slightly longer period, the increase in CSX stock over the last four-year period has been far from consistent and has largely been as volatile as the S&P 500. Returns for the stock were 26% in 2021, -17% in 2022, 14% in 2023, and -6% in 2024.

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, is less volatile. And it has comfortably outperformed the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.

Given the current uncertain macroeconomic environment around rate cuts and changes in the White House, could CSX face a similar situation as it did in 2021, 2023, and 2024 and underperform the S&P over the next 12 months — or will it see a strong jump? While we will soon update our model for CSX to reflect the latest results, from a valuation perspective, we think it has little room for growth. At its current levels of around $33, CSX stock is trading at 18x its expected earnings of $1.85 per share in 2025. This aligns with the stock’s average P/E ratio over the last five years.

While CSX stock looks like it has little room for growth, it is helpful to see how CSX’s Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.

[1] Returns as of 1/27/2025
[2] Cumulative total returns since the end of 2016

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