Pick CSX Over Norfolk Southern Stock?

Core Viewpoint - The analysis suggests that CSX stock is a better investment choice compared to Norfolk Southern due to its superior valuation, revenue growth, profitability, and financial position [1]. Group 1: Stock Performance - Norfolk Southern stock has gained 15% from $220 in early January 2021 to around $250, while CSX stock has increased by 10% from $30 to $33 during the same period [2]. - Norfolk Southern's returns were 27% in 2021, -16% in 2022, and -2% in 2023, while CSX's returns were 26%, -17%, and 13%, respectively [2]. Group 2: Revenue Growth - CSX's revenue grew at an average annual rate of 11.9%, from $10.6 billion in 2020 to $14.7 billion in 2023, while Norfolk Southern's revenue increased at 7.9%, from $9.8 billion to $12.2 billion [4]. - Norfolk Southern's total volume of carloads and intermodal units rose only 0.9% from 2020 to 2023, but its average revenue per carload increased by 23% [4]. Group 3: Profitability - Norfolk Southern's operating margin declined from 37.4% in 2020 to 35.2% in 2023, while CSX's margin decreased from 41.3% to 37.9% during the same period [7]. - CSX's operating margin for the last twelve months is 37.1%, compared to 34.4% for Norfolk Southern [7]. Group 4: Financial Risk - CSX has a debt-to-equity ratio of 29%, slightly lower than Norfolk Southern's 30% [8]. - CSX's cash as a percentage of assets is 3%, compared to 1% for Norfolk Southern, indicating a better cash position [8]. Group 5: Valuation and Future Prospects - CSX is trading at 17x its expected earnings of $1.94 per share in 2024, while Norfolk Southern is at 21x its expected earnings of $11.76 [9]. - CSX's valuation multiple is expected to trend higher due to its superior revenue growth prospects [9].