CSX - Embedded Expectations Analysis - 2020 06 18
CSX Corporation (CSX:USA) currently trades near corporate averages relative to UAFRS-based (Uniform) earnings, with a 22.5x Uniform P/E. At these levels, the market has expectations for profitability to remain stable, but management may be concerned about the impact of coronavirus, volume declines, and network efficiencySpecifically, management may have concerns about the impact of coronavirus on their
results, their current cash balance, and international volume declines due to a lackluster Chinese New Year and extended shutdowns in China. In addition, they may lack confidence in their ability to work with customers as they reopen their businesses, reduce depreciation expense in the near-term, and run their network at maximum efficiency. Furthermore, they may be exaggerating their business resiliency, their ability to attract new rail shippers, and the progress of their coronavirus-driven business adjustments. Moreover, they may lack confidence in their ability to sustain merchandise revenue growth, maintain carload share gains, and continue to execute in the construction aggregate business
CSX provides rail-based freight transportation services. The company's principal operating subsidiary, CSX Transportation, Inc., provides a link to the transportation supply chain through its rail network, which serves centers in states east of the Mississippi River, the District of Columbia and the Canadian provinces of Ontario and Quebec. The company's CSX Intermodal Terminals, Inc. subsidiary owns and operates a system of intermodal terminals, primarily in the eastern United States and also performs drayage services (the pickup and delivery of intermodal shipments). The company's Total Distribution Services, Inc. subsidiary serves the automotive industry with distribution centers and storage locations.
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