Leading U.S. railroad
) formally began construction of $100 million Winter Haven
intermodal rail terminal in Polk County, FL through conducting a
ground breaking ceremony. Upon construction, the terminal would
entail more intermodal business for the company and serve
customers in key markets: Tampa, Orlando and South Florida.
The construction involves 318 acres of land area and includes
five 3,000-feet loading tracks and two 10,000-feet arrival and
departure tracks. The tracks will be covered by three electric
Rail-Mounted Gantry Cranes that will facilitate loading and
unloading of the trains.
The terminal is expected to create over 8000 annual jobs and
produce economic development worth $10 billion over a span of 10
CSX Corp. continues to invest in expanding its network and
terminal capacity to ensure safety and service reliability for
its customers. The company expects to make an investment of $2.25
billion for 2012 and its estimated capital investment for over 5
years represent 18% of revenue. The company has launched the
National Gateway, a multi-year public-private infrastructure
initiative, which will significantly improve the efficiency of
the freight network between the Mid-Atlantic ports and the
Total project costs are approximately $850 million, of which
CSX Corp. expects to contribute approximately over $550 million.
Additionally, CSX Corp. entered into a deal with Florida state
regulators to deploy computerized rail operation called
As per the contract, CSX will sell a 61-mile rail corridor to
the State of Florida and in exchange receive exclusive rights to
operate on the SunRail track. The new system is expected to start
operating in 2014. Going forward, CSX plans to invest $500
million received from the sale proceeds of the deal for the
development of Florida rail infrastructure.
However, we remain cautious on CSX Corp. given the declines in
coal volumes, which constitute a significant part of its
business. Further, the company's capital intensive nature,
unionized workforce, increased competition from major railroads
Norfolk Southern Corp.
) as well as strict railroad regulations keep us on the
We maintain our long-term Underperform recommendation on CSX
Corporation. For the short-term (1-3 months) the stock holds a
Zacks #4 Rank (Sell rating).
CSX CORP (CSX): Free Stock Analysis Report
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