Freight rail services provider CSX (NASDAQ: CSX) met Wall Street’s revenue expectations in Q2 CY2025, but sales fell by 3.4% year on year to $3.57 billion. Its GAAP profit of $0.44 per share was 5.5% above analysts’ consensus estimates.

Is now the time to buy CSX? Find out by accessing our full research report, it’s free.

Company Overview

Established as part of the Chessie System and Seaboard Coast Line Industries merger, CSX (NASDAQ: CSX) is a transportation company specializing in freight rail services.

Revenue Growth

A company’s long-term sales performance can indicate its overall quality. Any business can have short-term success, but a top-tier one grows for years. Unfortunately, CSX’s 5.2% annualized revenue growth over the last five years was tepid. This was below our standard for the industrials sector and is a tough starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. CSX’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 3% annually. CSX isn’t alone in its struggles as the Rail Transportation industry experienced a cyclical downturn, with many similar businesses observing lower sales at this time.

We can dig further into the company’s revenue dynamics by analyzing its number of units sold, which reached 1.58 million in the latest quarter. Over the last two years, CSX’s units sold were flat. Because this number is better than its revenue growth, we can see the company’s average selling price decreased.

This quarter, CSX reported a rather uninspiring 3.4% year-on-year revenue decline to $3.57 billion of revenue, in line with Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 2.4% over the next 12 months. Although this projection implies its newer products and services will fuel better top-line performance, it is still below the sector average.

Today’s young investors won’t have read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.

Operating Margin

CSX has been a well-oiled machine over the last five years. It demonstrated elite profitability for an industrials business, boasting an average operating margin of 39.2%. This result isn’t surprising as its high gross margin gives it a favorable starting point.

Analyzing the trend in its profitability, CSX’s operating margin decreased by 11.9 percentage points over the last five years. Many Rail Transportation companies also saw their margins fall (along with revenue, as mentioned above) because the cycle turned in the wrong direction. We hope CSX can emerge from this a stronger company, as the silver lining of a downturn is that market share can be won and efficiencies found.

This quarter, CSX generated an operating margin profit margin of 35.9%, down 3.2 percentage points year on year. Since CSX’s operating margin decreased more than its gross margin, we can assume it was less efficient because expenses such as marketing, R&D, and administrative overhead increased.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

CSX’s unimpressive 5.6% annual EPS growth over the last five years aligns with its revenue performance. This tells us it maintained its per-share profitability as it expanded.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

CSX’s two-year annual EPS declines of 9.2% were bad and lower than its two-year revenue performance.

Diving into the nuances of CSX’s earnings can give us a better understanding of its performance. CSX’s operating margin has declined by 3.7 percentage points over the last two years. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

In Q2, CSX reported EPS at $0.44, down from $0.49 in the same quarter last year. Despite falling year on year, this print beat analysts’ estimates by 5.5%. Over the next 12 months, Wall Street expects CSX’s full-year EPS of $1.62 to grow 11.4%.

Key Takeaways from CSX’s Q2 Results

It was encouraging to see CSX beat analysts’ EBITDA expectations this quarter. We were also happy its EPS outperformed Wall Street’s estimates. Overall, this print had some key positives. The stock traded up 2.1% to $35.67 immediately after reporting.

So do we think CSX is an attractive buy at the current price? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.