How the New CN Partnership and All-Rail Service Has Changed the Investment Story at CSX (CSX)

• CSX and Canadian National Railway recently announced a new intermodal rail service agreement to provide an all-rail alternative for international containers moving from Canada’s West Coast through Memphis directly into Nashville, replacing the previous trucking segment.
• This move underscores CSX’s preference for expanding reach and enhancing service through partnerships and infrastructure improvements, rather than pursuing industry mergers.
• We'll explore how the expanded partnership for all-rail service to Nashville may reshape CSX's investment narrative and network reach.

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CSX Investment Narrative Recap

For shareholders of CSX, the investment story is centered on the company's ability to restore growth through strategic partnerships, operational improvements, and steady execution following recent declines in revenue and earnings per share. The new all-rail intermodal service with Canadian National Railway is a positive step toward expanding reach and improving supply chain efficiency, but it is not likely to materially alter the most important short-term catalyst: the timely, successful completion of major infrastructure projects such as the Howard Street Tunnel. The greatest risk remains disruption or delays in these transformational projects, which continue to impact network reliability and costs.

Among the recent announcements, the nearing completion of the Howard Street Tunnel project stands out alongside the CN partnership. Once finished, this upgrade is expected to boost CSX’s network fluidity and support the very efficiencies targeted by these new rail collaborations. Together, these initiatives are integral for service reliability and can strengthen the business’s fundamentals at a time when operational performance is under scrutiny.

However, even as CSX broadens partnerships, the risk of construction delays or cost overruns in critical infrastructure projects is something investors should keep in mind...

Read the full narrative on CSX (it's free!)

CSX's outlook envisions $15.7 billion in revenue and $3.9 billion in earnings by 2028. Achieving this calls for 3.6% annual revenue growth and an increase in earnings of $0.8 billion from the current $3.1 billion.

Uncover how CSX's forecasts yield a $37.92 fair value, a 17% upside to its current price.

Exploring Other Perspectives

Two members of the Simply Wall St Community estimate CSX's fair value between US$35.17 and US$37.92 per share. While infrastructure improvements remain key, differing assumptions on future growth and risk suggest a range of expectations for CSX’s outlook, consider reviewing a variety of perspectives.

Explore 2 other fair value estimates on CSX - why the stock might be worth as much as 17% more than the current price!

Build Your Own CSX Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your CSX research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.
• Our free CSX research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate CSX's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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