CSX posted 4Q25 operating income of $1.11 billion and net earnings of $720 million, or $0.39 per share, compared to $1.11 billion and $733 million, or $0.38 per share, in 4Q24. Excluding a pre-tax, non-cash goodwill impairment charge, adjusted operating income was $1.21 billion and adjusted net earnings were $815 million, or $0.42 per share, in 4Q24. Fourth-quarter 2025 operating income and earnings per share include approximately $50 million and $0.02, respectively, in “expenses related to severance and rationalization of specific technology investments.” (Download 4Q25 Financial Report below)
4Q25 Financial Highlights
- Revenue totaled $3.51 billion for the quarter, decreasing 1% year-over-year, “as the effects of lower merchandise volume and reduced export coal revenue offset higher pricing in merchandise and intermodal, an increase in intermodal volume, and higher fuel surcharge revenue.”
- Operating income was $1.11 billion, compared to adjusted operating income of $1.21 billion in the prior year. The operating ratio (OR) was 68.4%, compared to 68.7% and adjusted OR of 65.7% in the fourth quarter of 2024.
- EPS was $0.39, compared to adjusted EPS of $0.42 in the prior year.
- Fourth quarter operating income and EPS include $50 million and $0.02, respectively, in “severance and technology rationalization expense.”
Full-Year 2025 Financial Highlights
- Revenue totaled $14.09 billion.
- Operating income was $4.52 billion, and adjusted operating income was $4.69 billion, excluding a $164 million “goodwill impairment charge” in the third quarter. CSX’s OR was 67.9% for the full year; adjusted OR was 66.8%.
- EPS was $1.54, and adjusted EPS was $1.61.
“Our quarterly results reflect the subdued industrial demand environment and actions taken to adjust our cost structure,” said Steve Angel, President and CEO. “CSX has a strong operational foundation, and we are positioned to deliver improved financial performance in 2026 as we focus on driving productivity, cost control, and capital discipline while continuing to provide safe and reliable service.
“We’ve finished a challenging year for the industry, marked by subdued market demand, and we’re committed to delivering stronger financial performance in 2026. Service levels have remained high, and we’re taking thoughtful actions to control costs and improve capital efficiency with a focus on profitability and cash flow. CSX’s total volume was slightly higher this quarter, driven by our intermodal franchise that achieved a 5% year-over-year increase in volume. We’ve been winning new intermodal business as we’ve brought faster transit times and more connectivity to our customers. As we plan for 2026, we do not anticipate any meaningful improvement in macroeconomic conditions. We will stress execution of our own initiatives and will be ready when the market finally turns. We maintain a solid pipeline of growth initiatives, including nearly 600 industrial development projects, and continue to benefit from consistent infrastructure activity in our key regions. Our guidance for the upcoming year is for modest revenue growth, solid margin expansion, and a substantial increase in free cash flow.”
TD Cowen: Margins in Focus in ’26 Amid Soft Top-Line Expectations
By Wall Street Contributing Editor Jason Seidl, Elliot Alper and Uday Khanapurkar
CSX’s 4Q25 met expectations, though 2026 guidance assumes low-single-digit top-line growth due to continued industrial softness. CSX plans to drive productivity initiatives for margin growth despite persistent rail inflation. The magnitude of the approaching winter storm remains a 1Q26 bogey, but management is confident the network is in a much better position compared to prior “weather events.”
CSX reported 4Q25 EPS of $0.41 (excluding $0.02 one-time charges related to severance) in line with our and Street estimates. Top line of $3.51 billion was slightly below our estimate, but the OR was slightly better. CSX repurchased $112 million in shares in 4Q25, bringing the annual total to ~$1.4 billion.
CSX had little to add on the ongoing UNP/NSC merger saga yesterday as management remains focused on business fundamentals. We continue to believe BNSF is unlikely to make a bid for the foreseeable future.
Industrial end-market projections are modest for CSX with continued softness expected in housing, auto and chemicals. The low-single-digit revenue growth guide embeds a flat industrial production assumption as management attested to “no major catalysts” for the industrial economy. Soft expectations for this group tracks with panelists on our recent railroad roundtable. Forest products and metals could see some support despite soft core demand as CSX laps plant closures this year. CSX’s Southeast infrastructure build was the sole bright spot on the industrial side.
Intermodal was strong in 4Q25 on 5% carload growth driven by business wins that came on mid-to-late 2025. CSX expects wins to drive further intermodal carload growth in 2026, suggesting the Class I is not accounting for significant share return to Norfolk Southern. The Howard Street Tunnel project is on track to support double-stack intermodal cars in 2Q26 and customer bidding on this service has commenced, though CSX refrained from sizing the total opportunity, noting that full utilization of this capacity will take a few bid cycles to realize.
Coal carloads +1% masked robust 6% domestic tonnage growth as utility demand was strong in 4Q25 and sees further runway in 1Q26 given the impending winter storm and a sharp natural gas price rally (natural gas futures have climbed more than 70% in two days). CSX could be set up for a strong year for coal as two short-term mine closures are lapped. CSX cautioned on 2026 scheduled closures but acknowledged that these are likely to be delayed, suggesting near-term support at the least. Export coal benchmarks weakened off soft levels in 4Q25 and could somewhat mitigate domestic strength (domestic/international tonnage split is roughly equal for them).
Low single-digit revenue growth guidance for 2026 was below our 5% forecast. We had expected more optimism on the 2026 volume opportunity given plant closures in 2025, double stack opportunity and industrial growth, though CSX is expecting flat industrial production, modest GDP growth and additional plant closures. A 250 basis point of margin expansion guidance should be primarily focused within labor and PS&O; CSX expects persistent 3.0-3.5% inflation for the year. Long-term guidance was pulled as CSX evaluates its long-term opportunities given persistent weakness in industrial demand and a potentially changing U.S. Class I landscape.
We maintain our 2026 and 2027 EPS estimates. Our 19.5x multiple remains unchanged, keeping our $40 price target and Buy rating intact.
