How Important Is Merchandise Freight For CSX Corporation?
CSX Corporation (NYSE: CSX) generates its revenues from its coal, merchandise, and intermodal freight. Merchandise is the largest segment for CSX Corporation, and it accounts for over 60% of the total revenues. The segment includes freight from automotive, agriculture, chemicals, metals, minerals, forest products, and fertilizers related shipments. The contribution of merchandise freight to the company’s overall sales will likely see modest declines in the coming years, with the intermodal segment expected to grow at a faster pace. In this note we discuss the importance of the merchandise segment for CSX Corporation. We have created an interactive dashboard ~ How Important Is Merchandise Freight For CSX Corporation’s Stock? You can adjust various drivers to see the division’s impact on the company’s earnings. Also, here’s more Industrials Data.
Merchandise Revenues Have Seen Steady Growth And This Trend Will Likely Continue
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Merchandise’s Contribution To CSX Corporation’s EPS
We use adjusted net income margin of around 28%, similar to that of CSX Corporation overall, to arrive at $2.60 contribution to the company’s total earnings. To understand the contribution to CSX Corporation’s stock price, we use around 18x forward price to earnings multiple, and arrive at a $47 figure, which accounts for roughly 60% of our stock price estimate for CSX. Our forward price to earnings multiple for CSX is more or less around the same mark for that of the overall sector.
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