CSX

By:

Company Background
Stock Price
Major Competition
Micro and Macro Environment
Intensity of Rivalry
S.W.O.T Analysis
Recommendation
Agenda

Buy CSX @ $23.80
Price target
DCF: $26.___
Comps: $24.__-$___
Recommendation




Recent upgrades by FBR Capital & RBC
Avg. price target $26.54
Median price target $27.00
Analyst Ratings

Stock Price Last 5 Years
2008 2009 2010 2011 2012
Highs $ 70.70 $ 50.80 $ 21.60 $ 27.06 $ 23.71
Lows $ 30.61 $ 20.70 $ 14.02 $ 17.69 $ 18.88
Dividends $ 0.77 $ 0.88 $ 0.98 $ 0.45 $ 0.54
6

Business
Provides rail-based transportation in 23 states in the
eastern US
Operates various distribution centers & connects non-
rail customers through transferring products to trucks
Approx. 21,000 miles of rail in the eastern US as well
as Ontario and Quebec
Main items transported include:
Crushed stones, food, consumer, agriculture, chemical
products and coal
6

Financial Info Sheet
NYSE: CSX

Sales: $11.756B
Fuel: $1.672B
14.2225% of sales
Labor & Fringe: $3.02B
25.689% of sales
Market Cap: $ 24.44B
Price/Trailing Earnings:
Price/Forward Earnings:
Price/Sales:
Price/Book:
Major
Comparables

Union Pacific Corp
Market Cap: $65.57B
Canadian National
Railway Company
Market Cap: $42.01B
Norfolk Southern
Market Cap: $23.70B
Canadian Pacific Railway
Limited
Market Cap: $21.99B

Sully
Comparable

Strengths: Capable of reaching 2/3rds of Americans
Ability to transport a diverse portfolio:
Grains, chemicals, autos, metals, paper, consumer
products
Weakness:
Increases in passenger train volume
Poor economic conditions
Increase regulation
Severe weather
Liability of hazardous material
S.W.O.T. Analysis

Opportunities:
Increase in global competiveness
Continued growth in manufacturing and energy
Provide the most fuel efficient way to ship
Threats:
Disruption in supply chain
Could increase prices
Fuel shortage by OPEC
Terrorism
S.W.O.T. Analysis

Threat of Entry
Location Advantages
Government Subsidies

Buyer Power
Who are the buyers?

Supplier Power
Who are they
Easily integrate forward?
Porters 5 Forces


Threat of Substitute
How close are the substitutes?

Intensity of Rivalry
Porters 5 Forces cont.

Decline in coal
Droughts
Diversify away from coal
Advancing product offering
News Worthy Material

GDP: Last Year $15.66 Trillion (2.2%, YOY)
Operations cover, Eastern U.S., Ontario and Quebec
21,000 mi. of Track
Access to 70 Ports
Fuel is the largest input for CSX
Monitor fuel prices
Political: EPA influential regulating body
Global: Economic conditions affect demand on
commodities
Micro Environment

Decline in coal due milder weathers
Macro Environment

Sully
Recommendation