Thoughts on CSX Corporation?

by TheDitkaDog

Hello I’m Ditka. I follow the transport sector:

CSX provides rail freight transport over a network of approximately 21,000 route miles and 36 terminals across the Eastern Half of the US. It owns approximately 4k locomotives, 60k rail cars and 18k containers. It has roughly 22k employees and I forecast them generating $12bn + in annual revenues.

Here are my top reasons why CSX is a long-term hold for me:

  • The railroad is an essential part of the supply-chain, and despite the outbreak of COVID19, they remain open for business. In terms of volumes, carloads are down only 1.4% QTD. Core economy continues to move though, inventories have been depleted, given slow-downs in production in Asia, as well as increased demand for consumer good carloads.
  • Impressive contingency plans to avoid a network shutdown. That includes four sites which can be turned if its primary location is impacted.
  • They ended FY 2019 with 2bn in cash and 2.7x debt/EBITDA.
  • Low cost structure among its peers (operating ratio is sub 60%) as they have executed a Precision Scheduled Railroad (PSR) model for a few years now.

 

Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence.