CSX revenue jumps 12% to record, beating estimates

Key Facts

Railroad operator CSX reported record revenue of $4.02 billion in the third quarter of 2026, up 12% from a year earlier and above analysts' estimates. The results, announced on Wednesday, October 21, also showed earnings per share beating expectations, according to the company's statement and figures reported by Investing.com. Analysts had expected quarterly revenue of $3.95 billion, according to the website. Diluted earnings per share were $0.57, up 54% from the same period a year earlier, according to the official statement. That compared with an analyst estimate of $0.53 per share, according to Investing.com. The company's shares rose 4% in after-hours trading following the results, the website reported.

Operating income reached $1.57 billion during the quarter, up 44% on a reported basis, while net income totaled $1.05 billion, according to CSX's statement. The operating margin rose to 39.1%, an improvement of 880 basis points from a year earlier on a reported basis. The annual comparison benefited from a goodwill impairment that weighed on the previous year's results, with earnings growth rates lower when that item was excluded from the comparison base. On that adjusted basis, operating income rose 25% from the corresponding quarter, according to the company. Net income grew 29% compared with the previous year's adjusted results. Earnings per share rose 30% on the same basis, leaving profitability above its comparable level even after excluding the impact of the goodwill impairment.

Explaining revenue growth, commercial management said during the earnings call reported by Investing.com that "fuel accounted for about half of the growth." In freight operations, intermodal revenue reached $634 million in the third quarter, up 20%, according to the earnings presentation cited by the website. Intermodal volume reached 820,000 units during the period, benefiting from tight trucking capacity and service expansion. Management said domestic freight drove intermodal growth, identifying the source of the increase within the business. By contrast, it described international freight traffic as broadly flat, failing to match the pace of growth in domestic demand. Management added during the call: "International activity remained relatively stable," according to the transcript cited by Investing.com.

On costs, total operating expenses fell 2% to $2.45 billion in the third quarter, according to Investing.com. The decline also benefited from the absence of the goodwill impairment recorded in the previous year, alongside operating savings. Among expense items, fuel costs rose $170 million during the quarter. That came as locomotive fuel prices increased 67%, according to figures reported by the website, alongside fuel's contribution to revenue growth. Labor and benefits expenses also increased $19 million during the period. In the opposite direction, purchased services and other expenses fell $73 million due to efficiency savings, according to Investing.com.

For the nine months ended September 2026, free cash flow before dividends rose to $2.648 billion, according to the earnings presentation reported by Investing.com. Free cash flow before dividends was $1.066 billion in the corresponding period of 2025. During the first nine months of 2026, the company also returned $1.840 billion to shareholders, according to the same presentation. The funds returned included share repurchases and cash dividends. Those shareholder payments came during a period in which the company recorded an increase in free cash flow before dividends compared with the previous year.

For the full year of 2026, CSX raised its revenue growth outlook to the high single digits, according to management comments on the earnings call reported by Investing.com. The previous outlook ranged from the mid to high single digits, before the company narrowed its target to the upper end of that range. As winter approaches, management expects expenses to rise from the previous quarter due to seasonal factors. It also cited lower fuel efficiency during winter as a factor behind the expected increase in expenses. For next year, management said it had identified more than 100 initiatives to support productivity as part of its plans to improve operating performance.