Benchmark has reiterated its Buy rating on CSX (NASDAQ:CSX), maintaining a price target of $40, which indicates an upside of roughly 12% from the current trading level of $35.78. This valuation aligns with consensus estimates among analysts, who foresee potential growth in the stock's price based on recent data.
CSX’s fourth-quarter earnings per share came in at $0.39, slightly underperforming both Benchmark's forecast and market consensus, which stood at $0.41. The reported results included $50 million in expenses related to severance and technology rationalization, equivalent to $0.02 per share. Data indicates that 19 analysts have revised their earnings expectations downwards for the forthcoming period, and CSX's current price-to-earnings ratio of 23.38 is considered high relative to its industry peers.
Looking forward to 2026, CSX’s management has issued initial guidance anticipating low-single digit revenue growth, primarily propelled by modest increases in shipment volumes. The outlook factors in expectations of stable industrial output, moderate expansion of the gross domestic product, and constant prices for fuel and benchmark coal. This forecast comes on the back of a 3.8% revenue decrease over the past year, with CSX presently holding a market capitalization near $66.6 billion.
The company plans to enhance its operating ratio by 200 to 300 basis points year-over-year through concerted efforts on efficiency improvements, workforce optimization, and stringent expense control. Crucially, management highlighted that about $150 million of unusual charges reported in 2025 are not expected to recur in 2026. Efficiency measures are especially significant given that CSX’s current ratio stands at 0.85, signaling short-term liabilities surpassing liquid asset levels.
CSX is targeting at least a 50% increase in free cash flow, facilitated by an approximate $0.5 billion reduction in capital expenditures, aiming to bring investments below $2.4 billion in the coming year. The company has identified over 100 initiatives aimed at cost savings across various operations and continues to explore further avenues for financial optimization. Despite facing fiscal headwinds, CSX maintains a robust dividend payment history, having increased its dividend annually for 21 straight years and paid dividends uninterrupted for 45 years.
Recent quarterly financial results revealed that CSX’s EPS of $0.42 exceeded the forecasted $0.41, while revenue missed expectations, totaling $3.51 billion against a projected $3.55 billion. Analysts have shown varied reactions: RBC Capital adjusted its price target downward to $39.00, describing the earnings results as largely in line after accounting for discrete costs and tax effects; Evercore ISI lowered its price target to $40.00, citing EPS shortfalls; conversely, Raymond James lifted its price target to $41.00, expressing confidence in the company's operational initiatives under the ONECSX program aimed at improving efficiency.
These differing analyst assessments underscore a spectrum of views on CSX’s recent financial performance and the effectiveness of its strategic initiatives moving forward.