Shares of CSX Corp. (NASDAQ:CSX) rose more than 2% in premarket trading on Friday after the railroad operator posted third-quarter earnings that slightly beat analyst expectations, despite revenue headwinds from weaker merchandise shipments and lower coal prices.
CSX reported earnings of $0.44 per share, just one cent above consensus estimates. Revenue reached $3.59 billion, in line with forecasts but down 1% year-on-year. Total shipment volumes grew 1% to 1.61 million units, driven by intermodal gains, though both export coal and merchandise volumes fell.
New CEO Steve Angel highlighted the strength of the company’s rail network, saying it is “operating well” and positioned for long-term expansion.
M&A speculation remained a focus for investors. Angel signaled that he is open to strategic options that make sense for the company. Market chatter has centered on a potential merger between CSX and BNSF Railway, owned by Berkshire Hathaway, particularly following an $85 billion deal earlier this year aimed at combining Union Pacific and Norfolk Southern, which has yet to receive regulatory approval.
Some of the speculation has been tempered by an August partnership between CSX and BNSF to link their U.S. West and East Coast routes. Such partnerships have become increasingly common in the rail sector, as they allow operators to expand service offerings without undertaking major operational overhauls.
The company has also faced pressure from Ancora Holdings, an activist investor urging CSX to pursue a merger or other strategic moves. Angel’s appointment as CEO followed Ancora’s calls for leadership changes.
“Angel emphasized that CSXʼs focus will be on optimizing its operational, commercial, and financial opportunity set going forward. We couldn’t agree more,” analysts at BMO Capital Markets said in a note.
They added that “CSX has a self-help opportunity as it emerges from a challenging year, which, with strong execution, can deliver EPS/cash flow and valuation upside, ultimately positioning the company to negotiate from a position of strength when/if a consolidation opportunity emerges.”
This content is for informational purposes only and does not constitute financial, investment, or other professional advice. It should not be considered a recommendation to buy or sell any securities or financial instruments. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.
Some portions of this content may have been generated or assisted by artificial intelligence (AI) tools and been reviewed for accuracy and quality by our editorial team.