CSX Steams Ahead: New CEO’s Vision Delivers an Earnings Beat and Sparks M&A Buzz

CSX delivered a cleaner, more confident quarter that showcased an improving railroad and a steadier playbook under new CEO Steve Angel. Operations are running faster (best train velocity since early 2021), dwell is the lowest since mid-2023, and cars online are at a multi-year low—foundational blocks for margin rebuild. Volume ticked up 1% year over year (2% sequentially) to 1.61 million units, and while revenue slipped 1% on weaker export coal pricing and softer merchandise, management leaned on pricing discipline and intermodal growth to cushion the hit. With the Howard Street Tunnel and Blue Ridge projects largely across the finish line and double-stack clearance into Baltimore set to open Northeast lanes in 2Q26, CSX is pivoting from “stabilize” to “scale”—and that tone shift came through.

Against expectations, the quarter registered a modest beat on all the lines that matter to investors. Adjusted EPS of 44 cents topped the 42-cent consensus, while reported EPS of 37 cents reflects a $164 million non-cash goodwill impairment and about $60 million of discrete costs (restructuring, network disruption and advisory). Revenue of $3.59 billion edged past the $3.576 billion Street mark, and adjusted operating income of $1.25 billion squeaked ahead of roughly $1.24 billion expected (reported operating income was $1.09 billion). The message: core earnings power is stabilizing, and when you strip away one-offs, run-rate profitability is a touch better than feared.

What drove the print? Intermodal. Growth in containers alongside firm merchandise pricing offset a drag from export coal, where lower seaborne prices and earlier-year mine disruptions weighed. On the merchandise side, minerals, fertilizer, metals and automotive posted gains, while forest products, chemicals, and ag/food lagged amid trade-policy friction and end-market softness. Mix worked against revenue, but the network ran faster and cleaner, pulling down costs and setting up better incremental margins into year-end. Management emphasized disciplined execution and talent depth—code for keeping the service gains sticky.

The operating backdrop remains mixed, but less fragile. Trucking is still unsupportive, which keeps rail competitive but caps overall freight momentum. Trade policy noise (tariffs) and weak global commodity prices pressured some industrial commodities, even as auto and certain bulk flows improved. Coal is a headwind on price even as volumes normalize with a key mine reopening. Importantly, the macro rate path helps on the demand edges but can nick industrial sentiment—CSX is managing to that uncertainty with productivity and service reliability rather than volume heroics.

Headwinds and tailwinds in the quarter were straightforward. Headwinds: lower export coal realizations, merchandise volume softness in select verticals, and the cluster of non-recurring expenses (restructuring, network disruption) that shaved a couple of pennies off EPS. Tailwinds: network velocity, lower dwell, intermodal growth, and price realization in merchandise. Interest expense rose $19 million, but tax expense fell $46 million on renewable and state credits—another offset that supported bottom-line stability.

Guidance and capital plans were steady. CSX reaffirmed full-year volume growth and pointed to strong operating performance and cost efficiencies in 4Q. Capex stays at $2.5 billion (ex-Blue Ridge), with free cash flow year-to-date at $1.1 billion despite more than $850 million of Blue Ridge outflows and deferred taxes. The Blue Ridge rebuild is now expected to exceed $500 million pre-insurance; about $10 million of demobilization costs will trickle into 4Q. Headcount should be stable to slightly lower sequentially, consistent with a network that’s running better. Capital returns remain front-and-center: CSX has returned over $2 billion to shareholders year-to-date and continues to frame buybacks as “opportunistic” with the dividend reviewed annually—comforting signals for yield-minded holders.

M&A was the spicy topic, but the takeaway was measured. With peers pursuing a $71.5 billion combination, analysts pressed on whether CSX would play offense. Angel’s stance: run the railroad to best-in-class standards, keep optionality, but don’t force a deal into an “onerous” regulatory regime. He cited the Surface Transportation Board’s tighter June criteria and past integrations that “did not go swimmingly” as cautionary tales. Translation: CSX prefers value creation through execution, targeted partnerships, and friction-reducing collaboration with other rails (especially as Baltimore double-stack opens) rather than a bet-the-company merger that risks service and culture.

CSX’s quarter was a quiet credibility builder. Modest beats, better service metrics, and tangible capacity catalysts into 2026 argue the trough in operational effectiveness is behind the company. Near-term, coal pricing and uneven industrial demand will keep a lid on revenue growth, but the network reset plus pricing discipline should support incremental margin improvement. With guidance intact, capex contained, and buybacks active, the equity story tilts back toward steady compounding—more blocking and tackling than fireworks—while management keeps a pragmatic eye on strategic opportunities without mortgaging the franchise. In a freight market that still rewards reliability over raw speed, that’s exactly the right train to be on.