Al Root
CSX stock rose after the company reported better-than-expected third-quarter numbers on Thursday evening.
For the quarter, CSX announced earnings per share of 44 cents from sales of $3.6 billion. Wall Street was looking for 42 cents and $3.6 billion, respectively, according to FactSet.
Shares of the railroad jumped 3.5% in premarket trading to $37.23, while S&P 500 and Dow Jones Industrial Average futures were off 0.3% and 0.1%, respectively.
Benchmark analyst Nathan Martin called the quarter one of the company's "best operational quarters in years." Train speeds were up, wait times were down, train car utilization was up, and fuel consumption was down.
Still, operating margins fell 2.5 percentage points year over year, from the 37.4% reported in the third quarter of 2024. Weaker sales tend to hurt profitability; they fell about 1% year over year.
"It gets easier from here," wrote Evercore ISI analyst Jonathan Chappell. "Importantly, CSX has completed the two massive infrastructure projects on its network, without which there will be about $100 million fewer rerouting costs in 2026." The railroad doesn't have weak hurricane-impacted volumes to deal with like it did in the fourth quarter of 2024.
Chappell sees 15% earnings growth in 2026 as some of those recent headwinds abate. He rates shares Buy and has a $39 price target for the stock. He raised his price target $2 after earnings.
Martin rates shares Buy as well. His price target is $40. Overall, 69% of analysts covering the stock rate shares Buy, according to FactSet. The average Buy-rating ratio for stocks in the S&P 500 is about 55%. The average analyst price target for CSX stock is about $39.
The third-quarter conference call was the first for new CEO Stephen Angel, who took over for Joe Hinrichs only weeks prior. The change might have had something to do with CSX's approach to M&A.
In July, Union Pacific and Norfolk Southern agreed to a merger, potentially creating a truly transcontinental railroad if regulators allow it. CSX, before Angel, seemed reluctant to pursue a similar M&A transaction with a Canadian railroad or Berkshire Hathaway's BNSF.
Angel, of course, was asked about M&A on the earnings conference call. He said he would be patient. "The way these things work, these strategic opportunities, you got to wait for the right timing. You've got to wait for when the conditions are right," said Angel, adding that in the interim period, it's important to make sure the operation is running smoothly.
For now, Angel's top priority is "best-in-class performance."
Coming into Friday trading, CSX stock was up about 12% year to date and up about 9% over the past 12 months. M&A optimism has battled weak freight markets in investors' minds.
Write to Al Root at allen.root@dowjones.com
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October 17, 2025 09:11 ET (13:11 GMT)
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