“This quarter’s operational performance reflects the dedication of our workforce and our commitment to running the best railroad in North America,” CSX President and CEO Steve Angel said Oct. 16 during the Class I railroad’s third-quarter 2025 financial report. “We are proud that the network is operating well, and we see clear opportunities to leverage that operational strength moving forward. Looking ahead, CSX is well-positioned to build on this momentum to deliver long-term profitable growth and create value for our shareholders.”
CSX’s third-quarter 2025 operating income was $1.09 billion, compared to $1.35 billion in the prior-year period. Net income was $694 million, or $0.37 per share, compared to $818 million, or $0.46 per share, in the same period last year. “Excluding a non-cash goodwill impairment of $164 million in this year’s third-quarter results,” adjusted operating income was $1.25 billion and adjusted net earnings were $818 million, or $0.44 per share, the Class I reported.
In third-quarter 2025, CSX reported that adjusted operating income and adjusted earnings per share included $35 million and $0.01, respectively, “including corporate restructuring, severance, and advisory expenses.”
Volume in third-quarter 2025 totaled 1.61 million units for the quarter, up 1% compared to third-quarter 2024 and up 2% sequentially. Revenue totaled $3.59 billion for the third-quarter 2025, decreasing 1% year-over-year, “as the effects of lower export coal prices and a decline in merchandise volume were partially offset by increases in other revenue, higher pricing in merchandise, and intermodal volume growth.”
TD Cowen: Fortifying Service Amid Industry Consolidation
By Jason Seidl, Elliot Alper and Uday Khanapurkar
CSX posted a 3Q25 beat as service improvements mitigated cost headwinds. Its network is unshackled with the Howard Street Tunnel and Blue Ridge Subdivision projects complete, and non-recurring costs to lap going forward. Interline partnerships and double-stacking in Northeast provide a long-term intermodal growth runway as CSX positions for industry consolidation under new leadership.
CSX reported 3Q25 adjusted EPS of $0.44, beating our and consensus estimate of $0.42. Top line of $3.6 billion was in line with our estimate, and the beat was driven by OR outperformance of 60 bps vs. our estimate, an encouraging outcome considering well-understood labor and PS&O (Product Strategy and Operations) cost headwinds. Service momentum continues as the resolution of the Howard Street Tunnel and Blue Ridge projects unshackles the network. Velocity and cars on line were significantly improved in 3Q25, and progress should continue in 4Q25. With the critical routes now operational, CSX is poised to materially eliminate ~$25 million in network disruption costs sequentially and thus lap $100 million in non-recurring costs for 2026. We expect fuel efficiency to improve as a result as well and model accordingly. Efficiencies are expected to help CSX hold headcount flat to slightly down sequentially in 4Q25. Sustained service improvement and cost-out is encouraging and essential in a consolidating industry as CSX keeps its options open under new leadership.
Carloads were +1% in a mixed end-market backdrop. Softness in chemicals and forest products continued. Ag was –7% Y/Y but trends are expected to improve sequentially on improvements in both export and domestic markets. Coal remains dichotomous with export markets weak but domestic robust, although the export benchmark headwind is expected to moderate sequentially. 4Q25 also faces easy intermodal comps early in the quarter (indeed, QTD carloads +25% Y/Y). Management reiterated guidance calling for Y/Y carload growth, which is consistent with our modestly raised 4Q carload forecast.
CSX’s intermodal outlook was focused on long-term growth in a consolidated industry as investors likely look beyond near-term peak and size up the truck conversion opportunity for rail. CSX noted that impending consolidation has kickstarted cooperation. Indeed, the intermodal marketing agreement with BNSF should provide both railroads with an opportunity to win some business early on. CSX also remains on track to roll out double-stack intermodal in the Northeast in 2Q26, which should idiosyncratically support 2026 carloads.
Our 2025 EPS estimate moves up to $1.65 from $1.64, while our 2026 EPS estimate remains intact at $1.95. We modestly move our multiple up to 20x to reflect strong operational performance, which pushes our PT up $1 to $39. CSX is a high-quality company with solid fundamentals that appears well positioned to benefit from long-term economic growth. It should win back market share in 2026 following the completion of multiple network projects. CSX is well-positioned to grow with increased domestic infrastructure spending. Reiterate Buy.
Editor’s Comment: All of the above resulted from the leadership of former President and CEO Joe Hinrichs, Railway Age’s 2025 Railroader of the Year, unexpectedly—and to the chagrin and disbelief of many in this industry—ousted by his Board of Directors Sept. 29, just as this excellent quarter concluded. This is not a criticism of new CEO Steve Angel, whose compensation level, though he is untested running a railroad, is understood to be directly tied to pulling off a merger with, presumably, BNSF – William C. Vantuono
