CSX Corporation
Analysis
CSX spent four calls turning a cost-cutting story into a growth one: productivity landed early, volume accelerated and margins beat plan. The test now is whether that freight is profitable — it is arriving in the cheapest parts of the book. How much of the 2026 margin gain came from cost cuts rather than volume?
- Guidance has been raised twice, and mostly on cost.
Management dropped its multi-year targets in January, then raised the 2026 guide twice; by Q2 FY2026 it expected margin expansion above 350 basis points. Much of the revenue upgrade came from fuel, so the profit gain is what counts. How does today's operating margin compare with CSX's 2024 peak?
- The growth is arriving in the cheapest freight.
Q2 FY2026 volume rose 6%, with intermodal growing at more than double the rest of the business, while revenue per car excluding fuel fell on mix. Angel wants 'profitable growth, not market share' — profit is the test.
- Service slipped when volume arrived faster than expected.
Mike Cory said dwell and trip-plan performance "aren't where we want them to be" after the volume jump caught the railroad short of crews. Truck-to-rail conversions depend on reliability, so if service slips, the growth goes first. Which terminals had the worst dwell time, and are they fixed?
- The 100-plus cost initiatives keep landing ahead of schedule. Because CSX controls these savings, profit can keep growing even if freight demand stalls out.
- Prices on the contracts CSX can touch keep coming in above plan. Only about half the book renews each year, so the gain arrives in steps and carries into next year too.
- Howard Street Tunnel and the new CPKC lanes keep winning freight. These are routes CSX could not sell before, so that growth does not depend on the economy picking up.
- The fastest-growing freight is the cheapest per car. Sales can rise while the profit on each car falls, so a record sales quarter is not by itself a better year.
- Service stays uneven after the volume surge. Shippers moved freight to rail for reliability; if that slips they move it back to trucks and the growth unwinds.
- Higher diesel lifts sales more than profit. Fuel is billed back to customers but costs the same to buy, so sales rise while the money left over shrinks.
| Politician | Transaction | Amount | Traded | Filed |
|---|---|---|---|---|
Donald Trump Republican · Executive | Purchase | ≥$1K | Mar 17 | May 13 |
Donald Trump Republican · Executive | Purchase | ≥$50K | Mar 17 | May 13 |
Donald Trump Republican · Executive | Purchase | ≥$15K | Mar 2 | May 13 |
Kevin Hern Republican · House · OK-1 | Sale | ≥$1K | Aug 31 | Sep 25 |
Kevin Hern Republican · House · OK-1 | Sale | ≥$1K | Aug 27 | Sep 25 |
Congressional trading data provided by QuiverQuant
How CSX turned $14.1B of revenue into $4.5B of operating income.
| Revenue | ||
|---|---|---|
| Total Merchandise | $8.8B | ▼ 1.12% YoY |
| Intermodal | $2.1B | ▲ 5.00% YoY |
| Coal Services | $1.9B | ▼ 13.64% YoY |
| Trucking | $816.0M | ▼ 3.32% YoY |
| Total revenue | $14.1B | |
| Gross profit | $4.7B | 33.2% |
| Operating income | $4.5B | 32.1% |