Core Insights - CSX Corporation, with a market cap of $67.1 billion, is a leading freight railroad company in the U.S., providing rail-based transportation services for various goods [1] Financial Performance - CSX stock has gained 7.4% over the past year and 11.6% year-to-date, underperforming the S&P 500 Index, which surged 17.7% over the same period [2] - The company reported third-quarter earnings with an adjusted EPS of $0.44, exceeding expectations, but revenue of $3.59 billion slightly missed estimates [4] - Analysts forecast CSX to report an EPS of $1.65 for the current year, reflecting a 9.8% decline from the prior year [5] Analyst Ratings - The stock has a consensus "Moderate Buy" rating, with 17 "Strong Buys," 2 "Moderate Buys," and 7 "Holds" among 26 analysts [5] - J.P. Morgan analyst Brian Ossenbeck reiterated a "Buy" rating with a price target of $40, while the mean price target of $38.96 suggests an 8.2% upside from current levels [6]

Core Viewpoint - CSX is anticipated to report a year-over-year decline in earnings due to lower revenues, with the upcoming earnings report expected to significantly influence its stock price [1][2]. Earnings Expectations - The consensus estimate for CSX's quarterly earnings is $0.43 per share, reflecting a year-over-year decrease of 6.5% [3]. - Revenues are projected to be $3.61 billion, which is a slight decline of 0.2% compared to the same quarter last year [3]. Estimate Revisions - Over the past 30 days, the consensus EPS estimate has been revised 0.11% higher, indicating a slight reassessment by analysts [4]. - The Most Accurate Estimate for CSX is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -2.31%, suggesting a bearish outlook from analysts [12]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that a positive or negative reading can predict the likelihood of actual earnings deviating from consensus estimates, with a strong predictive power for positive readings [9][10]. - CSX currently holds a Zacks Rank of 4, which complicates the prediction of an earnings beat [12]. Historical Performance - In the last reported quarter, CSX was expected to post earnings of $0.42 per share but exceeded expectations with actual earnings of $0.44, resulting in a surprise of +4.76% [13]. - Over the last four quarters, CSX has only beaten consensus EPS estimates once [14]. Conclusion - CSX does not appear to be a strong candidate for an earnings beat, and investors should consider other factors when making decisions regarding the stock ahead of the earnings release [17].

Financial Data and Key Metrics Changes - Adjusted EBITDA for Q2 was $45.9 million, up 30% from Q1 2025 and up 34% from Q2 2024 [18] - The company expects annual EBITDA to exceed $450 million, including the acquisition of Wheeling and Lake Erie Railway [19] Business Line Data and Key Metrics Changes - TransStar reported adjusted EBITDA of $20.7 million, up 4% from Q1 2025 [20] - Long Ridge generated $23 million of EBITDA in Q2, up from $18.1 million in Q1 [21] - Jefferson's EBITDA was $11.1 million, up from $8 million in Q1 [22] Market Data and Key Metrics Changes - The Wheeling and Lake Erie Railway generated total revenue of approximately $150 million for the latest twelve months [7] - The company expects $20 million of annual cost savings from the Wheeling acquisition, primarily from network efficiencies [11] Company Strategy and Development Direction - The company announced a major acquisition of Wheeling and Lake Erie Railway for $1.05 billion, expected to transform its freight rail segment [6] - Plans to refinance the corporate balance sheet to increase free cash flow and provide flexibility for future growth [6] - The company aims to grow its freight rail segment and may consider monetizing other assets to focus on rail acquisitions [68] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving $200 million of targeted annual EBITDA from the combined rail companies by 2026 [10] - The company anticipates significant growth in revenues and EBITDA in 2025 due to the Wheeling acquisition and contracted business [19] - Management noted a mild pickup in M&A activity in the rail sector and sees opportunities for further acquisitions [44] Other Important Information - The company completed financing for its Phase II transloading project at Repauno, issuing $300 million of tax-exempt debt [22] - The company is actively pursuing additional acquisitions of complementary railroads to diversify revenue and commodity base [24] Q&A Session Summary Question: Can you talk about the synergies of putting TransStar and Wheeling together? - Management highlighted the expected $20 million of annual savings from the integration, emphasizing the strategic fit and immediate efficiencies [33][34] Question: What are the implications of the Wheeling acquisition on diversification? - The acquisition is expected to significantly enhance diversification, with TransStar's reliance on U.S. Steel decreasing from 85% to one-third of total business [36][38] Question: Are there continued opportunities for consolidation in the rail space? - Management noted a mild pickup in M&A activity and expressed confidence in pursuing additional acquisitions [44] Question: Can you elaborate on the $70 million EBITDA opportunity at Long Ridge? - Management clarified that the $70 million includes contracted revenue and potential future growth from data center opportunities, which are not yet included in the bar chart [48][49] Question: What is the status of Phase III at Repauno? - The permitting process is expected to be finalized by September 30, with a total cost of about $200 million and a projected payback period of two years [55] Question: How will the $1 billion of preferred stock impact cash flow? - The preferred stock will not trap cash, allowing significant excess cash flow to be distributed to the holding company after debt service [78]

Core Viewpoint - CSX is anticipated to report a year-over-year decline in earnings and revenues for the quarter ended March 2025, which could significantly influence its stock price depending on the actual results compared to estimates [1][2]. Earnings Expectations - The upcoming earnings report is expected to be released on April 16, 2025, with a consensus estimate of $0.38 per share, reflecting a year-over-year decrease of 17.4% [3]. - Revenues are projected to be $3.55 billion, down 3.7% from the same quarter last year [3]. Estimate Revisions - The consensus EPS estimate has been revised 0.2% higher in the last 30 days, indicating a slight reassessment by analysts [4]. - The Most Accurate Estimate for CSX is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -0.79%, suggesting a bearish outlook from analysts [10][11]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that a positive or negative reading can predict the likelihood of actual earnings deviating from consensus estimates, with a strong predictive power for positive readings [7][8]. - CSX currently holds a Zacks Rank of 3, which complicates the prediction of an earnings beat [11]. Historical Performance - In the last reported quarter, CSX was expected to post earnings of $0.43 per share but delivered $0.42, resulting in a surprise of -2.33% [12]. - Over the past four quarters, CSX has beaten consensus EPS estimates two times [13]. Conclusion - CSX does not appear to be a compelling candidate for an earnings beat, and investors should consider other factors when making decisions regarding the stock ahead of the earnings release [16].