CSX: 10 Things About 2Q26: Moving into high gear. Increasing estimates & PT

Research evidence excerpt

CSX: 10 Things About 2Q26: Moving into high gear. Increasing estimates & PT

23 July 2026

CSX

• New business wins (particularly driving growth in domestic steel and

industrial markets);

• Steady export volumes, benefiting from improved mine supply; and

• Solid coal demand (“power demand and recent plant life extensions will

support domestic utility burn”).

7) Versus a few areas of caution

CSX raised some yellow flags around the automotive end market, citing

“normalized inventories and summer shutdowns…leading to a softer start to H2

ahead of new model launches in Q4”.

In chemicals, management expects “plastics volumes to moderate following pull-

forward activity in H1.”

8) What’s encouraging about cost enhancement potential

CSX management discussed how “discretionary costs remain under intense

review and managers across the company are being empowered with tools and

visibility to take action on wasteful spending and other cost opportunities.”

They are entertaining more ideas on insourcing, which has resulted in some

savings already, where the pipeline was described as “robust”.

They are already building out their 2027 plan around efficiencies, and are about

halfway through the process, moving a lot earlier than normal.

9) Raising estimates

Our 3Q EPS estimate goes to $0.55, or 3% above consensus of $0.53, as we take

into account management’s confidence in potentially doing better than typical

seasonality on profitability improvement; 3Q OR typically deteriorates in the 100-

150 bps range from 2Q, and we’re baking in 80 bps of degradation.

Offsets to the tailwinds we expect in the third quarter from continued volume

growth and productivity include fewer property gains and insurance recoveries in