CSX Expected to Outperform Norfolk Southern in Future Growth

A report highlights that CSX shows superior revenue growth, profitability, and financial stability compared to Norfolk Southern, suggesting a favorable investment outlook for CSX stock over the next three years.

Date: 11-09-2024

AI Rating: 7

The report provides a comparative analysis of CSX (NYSE: CSX) and Norfolk Southern (NYSE: NSC) stocks, indicating that CSX is in a stronger position regarding several key financial metrics.

1. Revenue Growth: CSX has demonstrated a remarkable average annual revenue growth rate of 11.9% from $10.6 billion in 2020 to $14.7 billion in 2023. In contrast, Norfolk Southern's revenue has grown at only 7.9%, advancing from $9.8 billion to $12.2 billion in the same period. This significantly higher revenue growth for CSX paints a positive picture for its future performance.

2. Profit Margins: CSX's operating margin, though contracted, remains superior at 37.1% compared to Norfolk Southern’s 34.4%. The decline in Norfolk Southern's operating margin from 37.4% in 2020 to 35.2% in 2023, exacerbated by extraordinary charges, indicates potential challenges in maintaining profitability.

3. Financial Metrics and Risk: CSX's lower debt-to-equity ratio of 29% compared to 30% for Norfolk Southern suggests better financial health and stability. Moreover, CSX possesses a higher cash percentage of 3% relative to Norfolk Southern’s 1%, indicating a stronger liquidity position that may be attractive to investors.

4. Ratings: Based on the outlined factors: - Revenue Growth: 8 - Profit Margins: 7 - Financial Risk: 7 Overall, the analysis yields a consensus on a favorable outlook for CSX, earning a rating of 7 overall. This suggests a slight positive sentiment toward CSX stock relative to the current valuations and growth prospects.

5. Conclusion: Considering CSX’s superior growth metrics and lower financial risk, the report indicates that CSX is set to outperform Norfolk Southern, making CSX a potentially attractive investment opportunity.

Stocks: CSX NSC