Is CSX Stock Ready For Cheaper Diesel?

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CSX (CSX) stock returned 49.2% over the past year, against 11.3% for the S&P 500, and the railroad’s sales are growing again. Management said on the October 21, 2026 earnings call that part of that growth came from diesel, whose average price rose nearly 50% from a year earlier. Management also said fuel volatility can create some near-term noise, and shareholders will want to know how exposed CSX is to cheaper diesel. So how much of CSX’s growth came from fuel?

About Half Of CSX’s Revenue Growth Came From Fuel

Fuel contributed about half of CSX’s revenue growth in the third quarter of fiscal 2026, management said. The effect was strongest in intermodal, where CSX wins freight off the highway. Essentially all of the 13% rise in revenue per unit there, which is what CSX earns on each load, came from the fuel surcharge. A large share of the quarter’s growth is therefore tied to the price of diesel, and management itself said that price can swing.

Where Would CSX Feel Cheaper Diesel?

The fuel surcharge is where cheaper diesel would show up first. CSX took in $4.02 billion in the third quarter, about $0.43 billion more than a year earlier. A fall in diesel would eat into fuel’s share of that rise.

Volume is exposed as well. Reduced trucking availability, high truck rates and elevated diesel costs continue to benefit intermodal, which contributes the largest share of CSX’s volume growth, management said. With cheaper diesel, one of the reasons management gave for that pull would be gone.

Diesel is also a cost, though. Management said on the call that CSX’s own fuel costs have gone up, so its fuel bill would likely fall with diesel too. Shareholders already pay a premium for that growth. CSX stock trades at a P/E of 26.8 on its last twelve months of earnings, against 22.6 for the S&P 500.

CSX Has Gains That Do Not Come From Fuel

CSX also cut costs. Management said the team handled 5% more volume in the third quarter while reducing nonfuel costs by 3%. Prices outside fuel rose as well. In merchandise, revenue per unit excluding fuel was up more than 2%.

Profit grew too. On October 21, the company said operating income rose 25% from the year-earlier adjusted result. Free cash flow over the last twelve months was $3.21 billion, against $1.55 billion a year earlier. Cash from operations rose to $5.6 billion from $4.62 billion, and capital spending fell to $2.39 billion from about $3.07 billion. With cheaper diesel, CSX’s revenue would grow more slowly, yet the cost cuts and the price rises outside fuel do not depend on the price of diesel.

What Should CSX Holders Watch Next?

Management said the domestic bid season for 2027 contracts is starting now, and that the tightness in truck capacity began after CSX was well into the 2026 season. The effect of that tightness comes with a lag, management said. When CSX reports its fourth quarter, expected in January 2027, the share of revenue growth management attributes to fuel will be the number to watch.

Does This Mean You Should Act On CSX?

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