CSX’s operational recovery and Howard Street Tunnel catalyst support growth, but a 30.64x P/E already prices in much of the upside.
Overview
CSX is a leading Eastern North American railroad with approximately 20,000 route miles linking every major metropolitan area east of the Mississippi, where nearly two-thirds of the U.S. population resides. It transports merchandise, intermodal containers, coal, and bulk chemicals, with a diversified customer base spanning manufacturers, chemical producers, agricultural cooperatives, utilities, and retailers. **Q2 2026 demonstrated a meaningful operational recovery:** revenue reached a record $3.935 billion, up 10.1% year over year; operating income rose 17.4% to $1.51 billion; net earnings increased 21% to $1.00 billion; and diluted EPS climbed 23% to $0.54. The operating ratio improved to 61.7% from 64.1%, while volumes rose 6%. Management raised 2026 guidance to mid-to-high-single-digit revenue growth, more than 350 basis points of operating-margin expansion, and over 80% free-cash-flow growth. The Howard Street Tunnel and $5 billion buyback are important catalysts. However, at approximately $50.75 and 30.64x trailing earnings, CSX trades 63% above its 10-year average P/E of 18.79x, limiting upside unless recovery and efficiency gains exceed expectations.