If you tune into financial media, you’ll likely be bombarded with coverage about the ongoing AI-fueled market rally. While the technology sector receives the bulk of investors’ fanfare, this year, it’s neck and neck with industrials. The latter has posted a year-to-date (YTD) gain of 14.18%, good for third among the S&P 500’s 11 sectors.
That’s because the companies that manufacture machinery, tools, and industrial components, or are involved in the transportation and logistics of shipping goods, aren’t as exciting as the companies involved in the rapidly evolving world of AI. For value investors, big and boring doesn’t just have a place in their portfolios; it plays a central role.
Much of that allure comes from shares trading at perceived fair or below market value, given their price-to-earnings (P/E) multiples. They also pay dividends that typically offer attractive yields. But in many cases, companies in the industrials sector can also provide steady growth for patient shareholders.
That’s precisely the case with CSX Corp. (NASDAQ: CSX), which trades less than 5% from its all-time high and hauling freight-sized value towards a new record high after gaining more than 36% from its YTD low on April 8.
CSX: A Growing Legacy Class I Railroad
Since 1980, CSX has established a 20,000-mile rail network operating in the eastern United States, Ontario, and Quebec, Canada’s two most populous provinces. The Fortune 500 company’s market cap is $67.71 billion, and it’s a leader in rail-based freight transportation in North America.
Specifically, CSX provides rail, intermodal, and rail-to-truck transload services for several industries spanning energy, industrial, construction, agricultural, and consumer goods.
Although the company isn’t known for serial acquisitions, its recent M&A activity and rumors of more make it an interesting industry consolidation play. In 2021, CSX acquired Quality Carriers, North America’s largest bulk chemical transportation company and operator of more than 100 terminals and facilities in the United States, Canada, and Mexico.
In 2022, CSX acquired Pam An Railways, a regional freight railroad in northern New England. The company joined CSX’s network of commodities freight and logistics, including transportation of grain, coal, sand, gravel, lumber, paper, chemicals, and automobiles.
Since it acquired Quality Carriers, CSX has seen its annual revenue climb 16.13% from $12.52 billion in 2021 to $14.54 billion in 2024.
The company doesn’t appear to be finished with M&A activity, either. On July 31, Bloomberg reported that CSX is working with Goldman Sachs to explore potential merger options in response to competitor Union Pacific's (NYSE: UNP) acquisition of Norfolk Southern, the disgraced company responsible for the 2023 train derailment in East Palestine, Ohio.
That merger is expected to pressure CSX, which could result in additional M&A activity and, by extension, increase the company’s breadth and top line.
CSX: A Value Buy With Strong Fundamentals
The company announced mixed results when it reported Q2 earnings in late July. CSX beat on earnings with EPS of 44 cents, surpassing analysts’ expectations of 42 cents. However, quarterly revenue of $3.57 billion fell below Wall Street’s expectations, with a 3.5% year-over-year decline.
Still, from a value perspective, CSX’s earnings improved the stock’s value proposition for investors. With a trailing 12-month EPS of $1.62 and forecasts for EPS for the following year in the $1.83 to $2.09 range—representing an average year-over-year growth rate of 14.21%—the company’s forward P/E stands at 21.27.
Meanwhile, the freight mainstay’s financial health is outstanding. Cash flow from continuing operating activities generated $635 million in Q2, allowing the company to continue increasing its dividend for 21 consecutive years.
This puts it just four years away from achieving Dividend Aristocrat status. The dividend yields 1.43% alongside CSX’s sustainable payout ratio of 32.10%.
Capex for property, plant, and equipment (PP&E) stood at $776 million last quarter, demonstrating CSX’s commitment to infrastructure maintenance and growth. Speaking of PP&E, that figure has grown from $35.170 billion in Q3 2024 to $36.258 billion in Q2 2025. At the same time, the company’s total current liabilities decreased 12.80% from $3.421 billion in Q1 to $2.983 billion in Q2.
Wall Street is favorable to the railway giant. Short interest stands at just 1.35% of the float, while institutional ownership is approaching 74%. The stock is rated a Moderate Buy with 16 of the 22 analysts covering CSX assigning it a Buy rating.
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The article "This Railroad Stock Is Chugging Along to a New All-Time High" first appeared on MarketBeat.
