On of the leading North American railroads
) has been recognized for its carbon disclosure commitment for the
third consecutive year. CSX with a score of 95, occupies the
fourth-highest position on Carbon Disclosure Project (CDP) S&P
500 Carbon Disclosure Leadership Index (CDLI) and was
second-highest among the S&P industrial companies.
CDP is an international, not-for-profit organization that offers
environmental management system to companies across the globe. CDP
currently has a strength of 655 institutional investors with assets
worth of $78 trillion. The organization collects information on
greenhouse gas emissions through businesses and assesses weather
and water related risks and opportunities.
CSX Corporation's presence in the CDP index represents its
awareness toward conducting an environment friendly business
operation that remains accretive to the economy as well as ecology.
Apart from environmental protection, CSX Corp. continues to
invest in expanding 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 Midwest.
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 SunRail. 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 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 like
Norfolk Southern Corp.
) as well as strict railroad regulations keep us on the
We maintain our long-term Neutral rating on CSX Corporation. For
the short-term (1-3 months) the stock holds a Zacks #3 Rank
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