[Seeking Alpha] 2017 has been quite a "ride" for this railroads operator. After announcing the coming of Hunter Harrington as its new CEO at the beginning of the year, CSX (CSX) saw its new CEO passing away in December. While there was a clear "HH" effect on the stock when he hopped on board, shares haven’t been affected by his unexpected departure.In fact, I don’t think it’s only Mr. Harrington’s work, but CSX did an amazing job on improving their margins by streamlining their business (less hump yards, less operating regions and 1 consolidated dispatching office). CSX came from "one of the worst" to "one of the best" railroads in regard to their operating ratio. But with such a strong stock price appreciation, is there anything left for future investors? I don’t think so over short-term, but CSX is certainly a keeper.
Understanding the Business
CSX is a railroad company operating over 21,000 miles of railways, with access to 70 ports and nationwide transloading and distribution services. This may seem big, but Union Pacific (UNP) shows 51,683 miles in comparison. CSX has roughly half UNP market capitalization ($56B vs $110B) too.
CSX was one of the railroad owner-operators most affected by the latest down cycle in commodities due to its strong presence in the coal transportation business. As of May 30 th, 2018, CSX business came from chemicals (20%), coal (19%), Intermodal (17%), automotive (11%), Agriculture & Food (11%), forest products (7%), metals & equipment (6%), minerals (5%) and fertilizers (4%).