Home » Stocks » Bear Case Scenario $CSX, $UNP, $CNI, $CP, $IXT, $XTN, $SEA

Bear Case Scenario $CSX, $UNP, $CNI, $CP, $IXT, $XTN, $SEA

CSX is about to release earnings. Ponder the Bear Case Scenario.

Last recession round about 2008 or so say a major decline in rail traffic. CSX and railways are high fixed cost operations and need to move much cargo to be profitable.

CSX and most railroads own their own roads and are responsible for all capital expenditures for maintenance, upkeep, repairs, upgrades, improvements, expansions and other good ideas. Trucking companies are not. They just shout at politicians and try to pressure them into laying down some decent asphalt somewhere. Very different impact on cash flow. CSX has to spend truckers don’t.

Coal shipments have declined, are declining and will continue to decline. This is a huge stream of earnings which is disappearing rapidly. CSX does not have a plan B. Other product lines are hard pressed to compensate for the downward spiral.

George Gutowski writes from a caveat emptor perspective


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