In the early 1900's the Ottoman Empire (Turkey and the southeast corner of Europe near it) was refered to as 'The sick man of Europe'. The Ottomans had a lot of on-going problems. Eventually those problems caused a spark that precipitated WWI which in turn pretty much caused WWII. CSX has had to deal with John Snow, Conrail merger issues, possible merger with CP, buying an $84 million CEO, Mantle Ridge and the current issues about the future of CSX. Is CSX the sick man of North American railroads?
Thanks to Chris / CopCarSS for my avatar.
Mantle Ridge has made CSX sick by putting a invalid in charge for $84M.
Mike Ward had the company on a steady course until Mantle Ridge fed financial salmonela to the institutional investors - they are dead, they just don't know it yet.
Never too old to have a happy childhood!
CSX is certainly not sick as were PRR, NYC, New Haven and several other lines swept into Conrail, nor MILW, nor RI.
CSX is in much better shape than was virtually every carrier through the 1960s and 1970s, a result caused by the virtually total economic regulation of the industry.
As to CSX position within the industry now, that calls for more research than I am willing to do tonight.
Mac
Murphy Siding CSX has had to deal with John Snow, Conrail merger issues, possible merger with CP, buying an $84 million CEO, Mantle Ridge and the current issues about the future of CSX
You forgot to mention their neglected bridges.
CSX will likely be fine after the current group pillages the treasury and the American Taxpayer gets socked with a hefty "too big to fail" repair bill for putting Humpty back together again.
CSX is a mess. Harrison gutted the company to cut costs. Service is tanking and customers are looking for alternatives. Anyone can cut costs by firing people but it is a short sighted fix that doesn`t work. CSX is being flushed down the toilet.
Someone once (like 10 years ago?) described CSX as "The smartest bunch of guys who couldn't run a railroad."
To be clear: I don't agree at all with that conclusion - because CSX then and now has a lot of challenges that defy simple solutions (big surprise there, right? [heavy sarcasm] ), but I thought it was a funny turn of phrase.
- PDN.
Paul_D_North_Jr "The smartest bunch of guys who couldn't run a railroad."
Paul,
I like that. It reminds me of one of our former customers who was a very competent neurosurgeon. OTOH, he couldn't fly his plane without damaging it. I did three major repairs to his Seneca and when he upgraded to a Beech Baron I did two more.
No problem for me. It kept me fed.
Norm
Since March 2017 CSX has had the most incompetent management in the history of the company.
BaltACDSince March 2017 CSX has had the most incompetent management in the history of the company.
Depends on your point of view... If you're looking to make a quick buck as a vulture investor, they're doing pretty good...
Larry Resident Microferroequinologist (at least at my house) Everyone goes home; Safety begins with you My Opinion. Standard Disclaimers Apply. No Expiration Date Come ride the rails with me! There's one thing about humility - the moment you think you've got it, you've lost it...
tree68 BaltACD Since March 2017 CSX has had the most incompetent management in the history of the company. Depends on your point of view... If you're looking to make a quick buck as a vulture investor, they're doing pretty good...
BaltACD Since March 2017 CSX has had the most incompetent management in the history of the company.
I am not a vampire investor - I don't want to suck the life blood from a company and leave a moldering hulk. Maybe Mantle Ridge ought to adjust it's sights - suck the life blood out of AllState or Nationwide some of the other 'institutional investors' after all they have more blood to be sucked!
Trade and business media seemed to refer to EHH has a turn around artist. They made it sound like the railroads he went to were almost at the court house door, just days (if not hours) away from bankruptcy. IMO, the only real problems wasn't that they weren't profitable, but that they weren't profitable enough and/or returning money fast enough to the short term investor.
Like sharks that can smell blood in the water, these activists can smell money that can be squeezed out of a company. Even if it's only for the short term.
Jeff
BaltACD tree68 BaltACD Since March 2017 CSX has had the most incompetent management in the history of the company. Depends on your point of view... If you're looking to make a quick buck as a vulture investor, they're doing pretty good... I am not a vampire investor - I don't want to suck the life blood from a company and leave a moldering hulk. Maybe Mantle Ridge ought to adjust it's sights - suck the life blood out of AllState or Nationwide some of the other 'institutional investors' after all they have more blood to be sucked!
Don't be ridiculous - one vampire would never suck the lifeblood out of another (professional courtesy, and all that).
Is CSX "the sick man of railroading"?
Well, here in Ohio along the old B&O, there are far fewer trains lately; then yesterday I read that it's possible, if not likely, that the entire main line from Greenwich, O. to Baltimore may be up for sale, this only a few years after the tracks were lowered under bridges along the route at no small cost. There's probably chaos or at least confusion and low morale at headquarters; how many of these same people will be at their jobs in 5 years? On top of that, revenue's down. Profits are up? Yes, but for how long under these conditions?
If these aren't the symptoms of the sick man of railroading, they sure as heck are not those of a railroad that's thriving and has a zest for life.
CSX needs a skilled team of Doctors of Railroading to turn it around, but instead this Board of Directors, the hedge funds and their management ilk are either indifferent to or not up to the task that's before them.
Nobody thought GE could go out of business, either.
The way things are being run at CSX right now sounds like the head doesn't know what the body needs and the needed doctors to fix it are on vacation or won't take the insurance plan. What CSX needs is a true railroader to come in and take the reigns instead of a freaking hedge fund. Hey maybe Mike Haverty from KCS could merge CSX with KCS and save them.
SALfan BaltACD tree68 BaltACD Since March 2017 CSX has had the most incompetent management in the history of the company. Depends on your point of view... If you're looking to make a quick buck as a vulture investor, they're doing pretty good... I am not a vampire investor - I don't want to suck the life blood from a company and leave a moldering hulk. Maybe Mantle Ridge ought to adjust it's sights - suck the life blood out of AllState or Nationwide some of the other 'institutional investors' after all they have more blood to be sucked! Don't be ridiculous - one vampire would never suck the lifeblood out of another (professional courtesy, and all that).
There is no professional courtesy among vampires.
Guess we cannot expect STB to step in and slow or stop the sellin off ? As well the FRA requiring more maintenance ?
Shadow the Cats ownerThe way things are being run at CSX right now sounds like the head doesn't know what the body needs and the needed doctors to fix it are on vacation or won't take the insurance plan. What CSX needs is a true railroader to come in and take the reigns instead of a freaking hedge fund. Hey maybe Mike Haverty from KCS could merge CSX with KCS and save them.
CSX still has a market cap of $51 billion - that is more than NS, CP or KCS.
All US railroads are going to benefit from the Tax Cuts and Jobs Act of 2017, so the ghost of EHH is lucking out in that regard.
It would not be surprising to see CSX partitioned between a ”tag team“ of CN and BNSF, with CN getting more of the north-south portions of the Iron Triangle as stems off its main trunk from western Canada and BNSF getting the east-west routes of the Iron Triangle such as the ex-B&O and NYC, and some secondary east-west mains such as the ex-B&O to Louisville, ex-NC&StL to Memphis and full Access Birmingham to Atlanta.
An interesting Trains Magazine article would be one about how CP felt about being paid to get EHH off their books.
Regarding a possible break-up of CSX, note that CP already has and uses trackage rights south over the D&H to Schenectity and then south over the Hall Gate Bridge to Fresh Pond Jc. to interchange with the New York and Atlantic (LIRR freight service) and with their transfer to Cross Harbor. So if CN gets something CP would also be involved. They might want direct access to Hunts Point Market for Canadian food produce. (Or do they have that already?)
Murphy,
Here is my promised answer to your question.
Data is from Google Finance for KCS (ticker KSU), UP (UNP), NS (NSC), CSX (CSX). Data is for the years 2014-2016. Google's data is in four pages.
The first page is statistics which appear to be derived from annual report data and stock price. I focused on Return on Assets (ROA). In my opinion this is the most important single number. It is net income divided by assets. This number has been low in the railroad industry for decades and still is. The second is Payout Ratio (Payout). This is the percentage of net income paid out as dividends to stockholders. It excludes stock buy-backs, which also return money to shareholders so if you are concerned that management is giving the owners too much of their money back, you need to look at absolute value of both. In general the stock market likes stable or growing dividends, and most managements are conservative, that is try to keep the dividends low enough that they can be maintained through a bad patch of earnings. The final statistic is the Price/Earnings ratio. The ones shown are Trailing Twelve Months since they are historic facts. While it is called a ratio it is really a multiplier. For example if a stock is selling for $100, and last year's earnings were $5, then the PE is 20. It is a measure of how the market feels about growth and stability of a company's earnings.
Income is net after taxes directly off the Income Statement. Since the source documents give income for the past three years, I can give trends in gross and net over that period.
Assets, debt and equity come from the ballance sheet. The relationship of debt to equity is an indication of leverage. KCS has the least leverage with debt and equity about equal. The others are more highly leveraged.
From the cash flow statement come two usefull bits of information, capital expenditures (CAPEX) and stock issue/buybacks, and they are all buybacks and generally have been for several years.
THE COMPARISON 2014-2016
ROAD KCS UP NS CSX
ROA% 6.22 8.64 5.97 6.63
PAYOUT% 26.57 42.83 38.17 39.18
PE 21.65 25.01 23.91 9.54
INCOME $B .492 4.233 1.68 1.71
REV TREND DOWN DOWN DOWN DOWN SOME
INC. TREND FLAT DOWN DOWN DOWN SOME
ASSETS $B 8.817 55.718 34.892 35.414
DEBT $B 4.727 35.7 22.5 23.7
EQUITY $B 4.089 19.9 12.4 11.6
STOCK BUY $B .184 3.1 .742 1.056
CAPEX TREND DOWN DOWN DOWN FLAT
HARD HARD HARD
I was surprised at the accross the board decrease in Revenue. Much of this is probably due to Oboma's war on coal and generally low gas prices. Most observers do not expect utility coal to reach recent historical peaks.
I was also surprised at the decline in capex. I should not have been given decreases in revenue.
The biggest surprise of all was the divergence in PE ratios. KCS has come down from unsustainable heights. Remember when Fred Frailey was speculating that KCS could/would/should buy NS because of the difference in PE ratios. That is gone.
Note low ratio for CSX. It is THE outlier on the low side. If the way to make money is to buy low and sell high, then CSX is the buy of the group.
No Murphy, the figures do not say CSX is sick. They do say its stock is greatly undervalued, and that after a 50% run up after Mantle Ridge/EHH.
The year 2017 is not included of course. From quarterly reports we know CSX net has been flat to up a bit. All railroads are showing a one time extra ordinary income bump due to the new tax law. The wise analyst would exclude that.
CSX is far from sick.
Mac McCulloch
Thanks Mac. That's pretty interesting seeing in in black and white. I almost asked why you didn't include BNSF. Then an anvil fell on my head and I remembered.
After it sheds the 8,000 or so miles of track, It looks like CSX would become the second smallest, after KCS, class1. It would appear to me that two scenarios present themselves. CSX merges with, say, CP or a Warren Buffett/Berkshire hathaway type would buy the whole thing. I would prefer the latter so they can tell Wall Street and hedge funds everywhere to take a flying leap.
Head count down - accident count up
https://www.bizjournals.com/jacksonville/news/2018/02/14/as-csx-workforce-shrinks-accidents-pile-up-and.html?ana=e_ae_set1&s=article_du&ed=2018-02-14&u=aTvTC873DdMJJbkdoyTkTg07f2233b&t=1518639469&j=80006481
Another voice from the wilderness
https://www.railwayage.com/news/csxfrom-first-worst/
BaltACD Head count down - accident count up https://www.bizjournals.com/jacksonville/news/2018/02/14/as-csx-workforce-shrinks-accidents-pile-up-and.html?ana=e_ae_set1&s=article_du&ed=2018-02-14&u=aTvTC873DdMJJbkdoyTkTg07f2233b&t=1518639469&j=80006481
Some of the information attributed to CSX ,in fact, seems to indicate a totally, schizophrenic view of their reality?
FTA:"...Employee fatigue
Employment and safety are tightly linked in railroading, said Charles Culver, railroad operations consultant at Charles Culver & Associates and a certified locomotive engineer and conductor with 25 years experience.
“If you see a drop in employees, you’re going to see a drop in safety,” he said.
Safety declines as employees are asked to do more and become more fatigued, Culver said. He was especially critical of CSX’s decision to eliminate a rule that allowed conductors and engineers to take a 45-minute nap when trains were stopped, saying that it ran counter to “the Bible” of general operating rules accepted by most carriers.
The rule was a “tremendous help,” Culver said, and it stood for more than 20 years at CSX. Many railroads still have it in place, though not the two formerly run by Harrison.
“They’re expecting more work out of these guys than they are able to perform safely,” he said.
The train accident rate isn’t the only negative metric that has been climbing.
Last year, its rate of injuries per 200,000 man-hours increased 13 percent, according to FRA data, and the company’s rates of train accidents, collisions and derailments are all above national rates and the rates of NS.
Despite those figures, the company said that it is focused on safety.
“Safety is CSX’s top priority and we constantly strive to improve our safety record,” CSX Vice President of Communications Bryan Tucker said by email. “CSX is continuing efforts to implement our scheduled railroading strategy and to achieve our goal of becoming the best railroad in North America. We cannot be the best unless we are the safest, and we are relentlessly working toward that objective.”..."
samfp1943“Safety is CSX’s top priority and we constantly strive to improve our safety record,” CSX Vice President of Communications Bryan Tucker said by email. “CSX is continuing efforts to implement our scheduled railroading strategy and to achieve our goal of becoming the best railroad in North America. We cannot be the best unless we are the safest, and we are relentlessly working toward that objective.”..."
Sometimes I think colleges teach as part of their business courses the language of management-ese. They can throw around a bunch of positive-sounding words that convey no information and leave you asking "huh"?
_____________
"A stranger's just a friend you ain't met yet." --- Dave Gardner
CSX has always 'parsed' their statements; now it has evolved onto buzzword bullshit where they spin the words with no supporting actions.
CSX has completely revamped how they do things to wind up pretty much right where they started - at least operationally. They did some draconian cost cutting to improve the OR, but they didn't move the needle an inch on speed or service.
Which is what they claimed they were going to do.
And they have cleaverly smooshed all of 2017 into one data point to compare with currently weekly numbers - and offer no accurate year over year comparison.
Very opaque.
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
BaltACD CSX has always 'parsed' their statements; now it has evolved onto buzzword bullshit where they spin the words with no supporting actions.
It's those Eastern Universities, and their Master's Degrees in Bovine Corprology.
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