CSX Corp (NASDAQ:CSX) reported better-than-expected results for the second quarter of 2026, thanks to strong intermodal demand. More containers moved by rail rather than truck, along with steady pricing, which helped CSX reach a record revenue of $3.94 billion.
The strong revenue growth indicates that cross-modal shipping volume remains an important aspect of the company’s growth metrics. The company is increasingly capitalizing on shippers’ search for cheaper, more fuel-efficient ways to move goods.
CSX’s intermodal volume increased 9% year over year to 792,000 units, helped by domestic customer wins, new services, infrastructure investments, and tightening trucking capacity.
Rising shipping volumes indicate that freight demand is strong. Some shipments are still moving from long-haul trucking to rail as companies look to save on costs and use fuel more efficiently.
While multimodal shipping often results in less revenue per shipment, its large volumes can still lift earnings. This was clear, as the company’s earnings per share jumped 23% to $0.54, while operating income increased 17% to $1.51 billion. Similarly, it could keep driving growth over the long term if supply chains keep improving and container traffic grows with consumer spending.
The company is also enjoying growth in industrial freight. Steady demand for construction materials, metals, chemicals, and cars is supporting merchandise volumes. In the second quarter, carload volumes surged 4% year over year, thus helping offset weaker areas and strengthen its long-term earnings outlook.
CSX Investment Play
As mentioned earlier, CSX Corp. (NASDAQ:CSX) is benefiting from higher intermodal demand, domestic customer wins, new services, and tight trucking capacity. Even with a mixed freight market, the company continues to generate favorable pricing across merchandise and intermodal shipments.
CEO Steve Angel has also reiterated a focus on improving network efficiency and lowering operating costs. Amid the expected efficiencies, management projects 5% to 9% revenue growth in 2026. It also expects 80% growth in free cash flow likely to provide greater flexibility to fund dividends, share repurchases, and capital investments.
Coal remains an important profit contributor for CSX, but long-term coal demand continues to decline as utilities shift toward natural gas and renewable energy. Competition from trucking is also a possibility if diesel prices decline significantly, triggering a shift back to trucks and slowing intermodal growth.
Valuation
CSX’s valuation presents a mixed comparison with Union Pacific. The stock trades at a price-to-earnings multiple of 29x, a price-to-sales multiple of 6.7x, and an EV/EBITDA multiple of 17x. In contrast, Union Pacific Corporation (NYSE:UNP) trades at a price-to-earnings multiple of 23.6x, a price-to-sales multiple of 6.8x, and an EV/EBITDA of 15.9x.
While investors appear willing to pay a premium for CSX’s improving earnings outlook, the higher valuation leaves less room for disappointment should freight demand weaken or pricing power moderate.
Bottom Line
CSX Corp (NASDAQ:CSX) has shown it can grow earnings by boosting multimodal freight shipping, increasing industrial freight, keeping prices steady, and running more efficiently. Record second-quarter revenue, wider margins, and a better full-year outlook support management’s view that these improvements and more freight could keep earnings rising in the next few quarters.
While the stock has a low short interest of 2.10%, or 38.97 million shares, not many investors are betting against it. In comparison, Union Pacific Corporation (NYSE:UNP) has a higher short interest of 4.81%.
Hedge fund activity also shows how institutions feel about CSX. As of the end of the first quarter, 65 hedge funds owned CSX shares, down from 70 in the previous quarter and less than the 96 funds holding Union Pacific Corporation (NYSE:UNP), according to the Insider Monkey database. Fisher Asset Management, Viking Global, and Adage Capital Management raised their stakes by 3%, 36%, and 85%, respectively. This suggests weaker overall ownership breadth but continued conviction among some of the company’s largest hedge-fund shareholders.
While we acknowledge the risk and potential of CSX as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CSX and that has 10,000% upside potential, check out our report about this cheapest AI stock.
READ NEXT: Is Alibaba the Best Chinese AI Play After Apple’s Endorsement? and SpaceX (SPCX) Loses Its IPO Premium as a Bigger Supply Test Looms.
Disclosure: None. Follow Insider Monkey on Google News.
Hedge Fund Resource Center