CSX Corporation CSX is currently mired in multiple headwinds, which, we believe, have made it an unimpressive investment option.

Let us delve deeper.

Southward Earnings Estimate Revisions: The Zacks Consensus Estimate for first-quarter 2025 earnings has moved 17% south in the past 90 days. For the current year, the consensus mark for earnings has been revised 10.2% downward in the same time frame. The unfavorable estimate revisions indicate brokers’ lack of confidence in the stock.

Dim Price Performance: CSX Corp’s price trend reveals that its shares have lost 18.8% over the past year compared with the transportation-rail industry’s 11.9% decline.

CSX Stock One-Year Price Comparison

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Weak Zacks Rank & Style Score: CSX currently carries a Zacks Rank #4 (Sell). The company’s current Value Score of D shows its unattractiveness.

Negative Earnings Surprise History: CSX Corp has a disappointing earnings surprise history. The company’s earnings lagged the Zacks Consensus Estimate in two of the last four quarters and outpaced the mark in the remaining two quarters, delivering an average miss of 0.55%.

Other Headwinds: CSX’s prospects are being primarily hurt by the soft coal market. The weak coal market has resulted in below-par coal revenues. Coal revenues fell 10% year over year to $2.24 billion in 2024. Coal volumes decreased 3%. For 2025, CSX Corpexpects coal volumes to be lower due to facility shutdowns and mine production issues. A weak trucking market is another challenge.

Rail network issues due to headwinds like locomotive or crew/labor shortages and other service disruptions represent a major challenge for CSX. Network issues or supply-chain constraints are likely to adversely impact service levels, hurting operating efficiency or shipment volumes.

Elevated capital expenditure is another concern. CSX Corp's management expects 2025 capex to be $2.5 billion, suggesting no change from the 2024 actuals. CSX shares are more volatile than the market. The combination of weak coal market, rail network issues and high capex cast a shadow over its investment prospects.

Bearish Industry Rank 

The industry to which CSX belongs currently has a Zacks Industry Rank of 147 (out of 248 groups). Such a weak rank places the industry in the bottom 40% of the Zacks industries. Studies have shown that 50% of a stock price movement is directly tied to the performance of the industry group that it hails from.

In fact, a robust stock in a weak industry is likely to underperform an ordinary stock in a strong group. Therefore, considering the industry’s performance becomes imperative.

Other Stocks to Consider

Investors interested in the Zacks Transportation sector may consider United Airlines UAL and SkyWest SKYW. Both these companies currently sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

United Airlines

United Airlines has an expected earnings growth rate of 21.11% for the current year. The Zacks Consensus Estimate for UAL’s 2025 earnings per share has been revised 10.6% upward in the past 60 days.

The company has an encouraging record with respect to the earnings surprise, having surpassed the Zacks Consensus Estimate in the trailing four quarters, the average beat being 22.93%. UAL shares have skyrocketed 161.2% in the past year.

SkyWest

SkyWest, founded in 1972, is based in St. George. It operates regional jets for major U.S. airlines. SKYW’s track of meeting the requirements of each of its airline heavyweight partners bodes well. Revenues from flying agreements (which account for the bulk of the top line) are impressive, owing to SKYW’s above ability. Owing to an uptick in air travel demand, passenger volumes have been upbeat and are likely to increase going forward. This is likely to keep SkyWest's top line in good shape.

SKYW has an impressive earnings surprise history. The company's earnings outpaced the Zacks Consensus Estimate in the trailing four quarters, delivering an average surprise of 16.71%. The Zacks Consensus Estimate for 2025 earnings per share has been revised 7.9% upward in the past 60 days.

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This article originally published on Zacks Investment Research (zacks.com).

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