Intrinsic value of CSX - CSX

Previous Close

$48.78

  Intrinsic Value

$15.09

stock screener

  Rating & Target

str. sell

-69%

  Value-price divergence*

-127%

Previous close

$48.78

 
Intrinsic value

$15.09

 
Up/down potential

-69%

 
Rating

str. sell

 
Value-price divergence*

-127%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of CSX stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 45.1

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -6.28
  9.60
  9.14
  8.73
  8.35
  8.02
  7.72
  7.44
  7.20
  6.98
  6.78
  6.60
  6.44
  6.30
  6.17
  6.05
  5.95
  5.85
  5.77
  5.69
  5.62
  5.56
  5.50
  5.45
  5.41
  5.37
  5.33
  5.30
  5.27
  5.24
  5.22
Revenue, $m
  11,069
  12,132
  13,240
  14,396
  15,598
  16,849
  18,149
  19,500
  20,904
  22,364
  23,880
  25,457
  27,098
  28,805
  30,582
  32,432
  34,361
  36,372
  38,470
  40,659
  42,945
  45,332
  47,827
  50,435
  53,162
  56,015
  59,001
  62,126
  65,399
  68,826
  72,417
Variable operating expenses, $m
 
  7,061
  7,706
  8,378
  9,078
  9,806
  10,563
  11,349
  12,166
  13,016
  13,898
  14,816
  15,771
  16,764
  17,798
  18,876
  19,998
  21,169
  22,389
  23,663
  24,994
  26,383
  27,835
  29,353
  30,940
  32,601
  34,339
  36,158
  38,062
  40,057
  42,146
Fixed operating expenses, $m
 
  1,420
  1,455
  1,491
  1,529
  1,567
  1,606
  1,646
  1,687
  1,730
  1,773
  1,817
  1,863
  1,909
  1,957
  2,006
  2,056
  2,107
  2,160
  2,214
  2,269
  2,326
  2,384
  2,444
  2,505
  2,568
  2,632
  2,698
  2,765
  2,834
  2,905
Total operating expenses, $m
  7,795
  8,481
  9,161
  9,869
  10,607
  11,373
  12,169
  12,995
  13,853
  14,746
  15,671
  16,633
  17,634
  18,673
  19,755
  20,882
  22,054
  23,276
  24,549
  25,877
  27,263
  28,709
  30,219
  31,797
  33,445
  35,169
  36,971
  38,856
  40,827
  42,891
  45,051
Operating income, $m
  3,274
  3,651
  4,079
  4,526
  4,991
  5,476
  5,980
  6,505
  7,051
  7,618
  8,209
  8,824
  9,464
  10,131
  10,826
  11,551
  12,307
  13,096
  13,920
  14,781
  15,681
  16,623
  17,607
  18,638
  19,717
  20,847
  22,030
  23,271
  24,572
  25,935
  27,365
EBITDA, $m
  4,575
  5,075
  5,633
  6,216
  6,822
  7,454
  8,110
  8,794
  9,504
  10,243
  11,012
  11,812
  12,645
  13,512
  14,416
  15,358
  16,340
  17,365
  18,436
  19,554
  20,722
  21,943
  23,221
  24,557
  25,956
  27,421
  28,956
  30,563
  32,248
  34,013
  35,865
Interest expense (income), $m
  606
  614
  738
  869
  1,006
  1,148
  1,296
  1,450
  1,609
  1,775
  1,948
  2,127
  2,314
  2,508
  2,710
  2,920
  3,139
  3,367
  3,605
  3,853
  4,112
  4,382
  4,664
  4,959
  5,268
  5,590
  5,928
  6,281
  6,650
  7,037
  7,443
Earnings before tax, $m
  2,741
  3,038
  3,341
  3,657
  3,986
  4,328
  4,684
  5,055
  5,441
  5,843
  6,261
  6,697
  7,150
  7,623
  8,116
  8,631
  9,168
  9,729
  10,316
  10,929
  11,570
  12,241
  12,943
  13,678
  14,449
  15,256
  16,103
  16,990
  17,921
  18,898
  19,922
Tax expense, $m
  1,027
  820
  902
  987
  1,076
  1,169
  1,265
  1,365
  1,469
  1,578
  1,690
  1,808
  1,931
  2,058
  2,191
  2,330
  2,475
  2,627
  2,785
  2,951
  3,124
  3,305
  3,495
  3,693
  3,901
  4,119
  4,348
  4,587
  4,839
  5,102
  5,379
Net income, $m
  1,714
  2,217
  2,439
  2,670
  2,910
  3,159
  3,420
  3,690
  3,972
  4,265
  4,571
  4,888
  5,220
  5,565
  5,925
  6,301
  6,693
  7,102
  7,530
  7,978
  8,446
  8,936
  9,448
  9,985
  10,548
  11,137
  11,755
  12,403
  13,082
  13,795
  14,543

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,020
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  35,414
  37,676
  41,119
  44,708
  48,442
  52,326
  56,364
  60,560
  64,920
  69,452
  74,162
  79,060
  84,154
  89,455
  94,974
  100,722
  106,712
  112,957
  119,472
  126,270
  133,368
  140,782
  148,530
  156,629
  165,099
  173,960
  183,233
  192,939
  203,102
  213,746
  224,896
Adjusted assets (=assets-cash), $m
  34,394
  37,676
  41,119
  44,708
  48,442
  52,326
  56,364
  60,560
  64,920
  69,452
  74,162
  79,060
  84,154
  89,455
  94,974
  100,722
  106,712
  112,957
  119,472
  126,270
  133,368
  140,782
  148,530
  156,629
  165,099
  173,960
  183,233
  192,939
  203,102
  213,746
  224,896
Revenue / Adjusted assets
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
Average production assets, $m
  30,662
  33,605
  36,676
  39,876
  43,207
  46,672
  50,273
  54,016
  57,905
  61,947
  66,148
  70,517
  75,060
  79,789
  84,711
  89,838
  95,181
  100,751
  106,561
  112,625
  118,956
  125,569
  132,480
  139,704
  147,259
  155,162
  163,433
  172,090
  181,155
  190,649
  200,594
Working capital, $m
  447
  -267
  -291
  -317
  -343
  -371
  -399
  -429
  -460
  -492
  -525
  -560
  -596
  -634
  -673
  -714
  -756
  -800
  -846
  -894
  -945
  -997
  -1,052
  -1,110
  -1,170
  -1,232
  -1,298
  -1,367
  -1,439
  -1,514
  -1,593
Total debt, $m
  11,293
  13,178
  15,519
  17,959
  20,499
  23,140
  25,885
  28,739
  31,704
  34,785
  37,988
  41,319
  44,783
  48,387
  52,140
  56,049
  60,122
  64,369
  68,799
  73,422
  78,248
  83,290
  88,558
  94,066
  99,826
  105,851
  112,156
  118,756
  125,667
  132,905
  140,488
Total liabilities, $m
  23,735
  25,620
  27,961
  30,401
  32,941
  35,582
  38,327
  41,181
  44,146
  47,227
  50,430
  53,761
  57,225
  60,829
  64,582
  68,491
  72,564
  76,811
  81,241
  85,864
  90,690
  95,732
  101,000
  106,508
  112,268
  118,293
  124,598
  131,198
  138,109
  145,347
  152,930
Total equity, $m
  11,679
  12,056
  13,158
  14,306
  15,501
  16,744
  18,036
  19,379
  20,775
  22,225
  23,732
  25,299
  26,929
  28,626
  30,392
  32,231
  34,148
  36,146
  38,231
  40,406
  42,678
  45,050
  47,530
  50,121
  52,832
  55,667
  58,634
  61,740
  64,993
  68,399
  71,967
Total liabilities and equity, $m
  35,414
  37,676
  41,119
  44,707
  48,442
  52,326
  56,363
  60,560
  64,921
  69,452
  74,162
  79,060
  84,154
  89,455
  94,974
  100,722
  106,712
  112,957
  119,472
  126,270
  133,368
  140,782
  148,530
  156,629
  165,100
  173,960
  183,232
  192,938
  203,102
  213,746
  224,897
Debt-to-equity ratio
  0.967
  1.090
  1.180
  1.260
  1.320
  1.380
  1.440
  1.480
  1.530
  1.570
  1.600
  1.630
  1.660
  1.690
  1.720
  1.740
  1.760
  1.780
  1.800
  1.820
  1.830
  1.850
  1.860
  1.880
  1.890
  1.900
  1.910
  1.920
  1.930
  1.940
  1.950
Adjusted equity ratio
  0.310
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,714
  2,217
  2,439
  2,670
  2,910
  3,159
  3,420
  3,690
  3,972
  4,265
  4,571
  4,888
  5,220
  5,565
  5,925
  6,301
  6,693
  7,102
  7,530
  7,978
  8,446
  8,936
  9,448
  9,985
  10,548
  11,137
  11,755
  12,403
  13,082
  13,795
  14,543
Depreciation, amort., depletion, $m
  1,301
  1,424
  1,554
  1,690
  1,831
  1,978
  2,130
  2,289
  2,454
  2,625
  2,803
  2,988
  3,181
  3,381
  3,589
  3,807
  4,033
  4,269
  4,515
  4,772
  5,041
  5,321
  5,614
  5,920
  6,240
  6,575
  6,925
  7,292
  7,676
  8,078
  8,500
Funds from operations, $m
  3,040
  3,641
  3,993
  4,359
  4,740
  5,137
  5,550
  5,979
  6,426
  6,890
  7,373
  7,876
  8,400
  8,946
  9,514
  10,107
  10,726
  11,371
  12,046
  12,750
  13,486
  14,256
  15,062
  15,905
  16,788
  17,712
  18,680
  19,695
  20,759
  21,874
  23,043
Change in working capital, $m
  -1
  -23
  -24
  -25
  -26
  -28
  -29
  -30
  -31
  -32
  -33
  -35
  -36
  -38
  -39
  -41
  -42
  -44
  -46
  -48
  -50
  -53
  -55
  -57
  -60
  -63
  -66
  -69
  -72
  -75
  -79
Cash from operations, $m
  3,041
  3,665
  4,018
  4,385
  4,767
  5,165
  5,578
  6,009
  6,457
  6,922
  7,407
  7,911
  8,436
  8,983
  9,554
  10,148
  10,768
  11,416
  12,092
  12,798
  13,537
  14,309
  15,117
  15,962
  16,848
  17,775
  18,746
  19,764
  20,831
  21,949
  23,122
Maintenance CAPEX, $m
  0
  -1,299
  -1,424
  -1,554
  -1,690
  -1,831
  -1,978
  -2,130
  -2,289
  -2,454
  -2,625
  -2,803
  -2,988
  -3,181
  -3,381
  -3,589
  -3,807
  -4,033
  -4,269
  -4,515
  -4,772
  -5,041
  -5,321
  -5,614
  -5,920
  -6,240
  -6,575
  -6,925
  -7,292
  -7,676
  -8,078
New CAPEX, $m
  -2,398
  -2,943
  -3,071
  -3,200
  -3,331
  -3,464
  -3,601
  -3,743
  -3,889
  -4,042
  -4,201
  -4,368
  -4,544
  -4,728
  -4,922
  -5,127
  -5,343
  -5,570
  -5,810
  -6,064
  -6,331
  -6,613
  -6,910
  -7,224
  -7,555
  -7,903
  -8,271
  -8,657
  -9,065
  -9,494
  -9,946
Cash from investing activities, $m
  -1,798
  -4,242
  -4,495
  -4,754
  -5,021
  -5,295
  -5,579
  -5,873
  -6,178
  -6,496
  -6,826
  -7,171
  -7,532
  -7,909
  -8,303
  -8,716
  -9,150
  -9,603
  -10,079
  -10,579
  -11,103
  -11,654
  -12,231
  -12,838
  -13,475
  -14,143
  -14,846
  -15,582
  -16,357
  -17,170
  -18,024
Free cash flow, $m
  1,243
  -577
  -478
  -370
  -254
  -131
  -1
  136
  279
  427
  581
  740
  905
  1,075
  1,250
  1,432
  1,619
  1,812
  2,012
  2,219
  2,433
  2,655
  2,886
  3,125
  3,373
  3,632
  3,901
  4,181
  4,474
  4,779
  5,098
Issuance/(repayment) of debt, $m
  781
  2,216
  2,342
  2,440
  2,540
  2,641
  2,746
  2,853
  2,965
  3,081
  3,203
  3,330
  3,464
  3,605
  3,753
  3,909
  4,073
  4,247
  4,430
  4,623
  4,827
  5,042
  5,268
  5,508
  5,760
  6,025
  6,305
  6,600
  6,911
  7,238
  7,582
Issuance/(repurchase) of shares, $m
  -1,056
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -588
  2,216
  2,342
  2,440
  2,540
  2,641
  2,746
  2,853
  2,965
  3,081
  3,203
  3,330
  3,464
  3,605
  3,753
  3,909
  4,073
  4,247
  4,430
  4,623
  4,827
  5,042
  5,268
  5,508
  5,760
  6,025
  6,305
  6,600
  6,911
  7,238
  7,582
Total cash flow (excl. dividends), $m
  655
  1,638
  1,864
  2,070
  2,286
  2,511
  2,745
  2,989
  3,244
  3,508
  3,784
  4,070
  4,369
  4,679
  5,003
  5,340
  5,692
  6,059
  6,442
  6,842
  7,260
  7,697
  8,154
  8,632
  9,133
  9,657
  10,206
  10,781
  11,385
  12,017
  12,680
Retained Cash Flow (-), $m
  -27
  -1,066
  -1,102
  -1,148
  -1,195
  -1,243
  -1,292
  -1,343
  -1,395
  -1,450
  -1,507
  -1,567
  -1,630
  -1,696
  -1,766
  -1,839
  -1,917
  -1,998
  -2,085
  -2,176
  -2,271
  -2,373
  -2,479
  -2,592
  -2,710
  -2,835
  -2,967
  -3,106
  -3,252
  -3,406
  -3,568
Prev. year cash balance distribution, $m
 
  689
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  1,261
  762
  922
  1,091
  1,268
  1,453
  1,647
  1,848
  2,058
  2,276
  2,503
  2,738
  2,983
  3,237
  3,501
  3,775
  4,061
  4,357
  4,667
  4,989
  5,324
  5,675
  6,040
  6,422
  6,821
  7,239
  7,675
  8,132
  8,611
  9,112
Discount rate, %
 
  6.90
  7.25
  7.61
  7.99
  8.39
  8.81
  9.25
  9.71
  10.19
  10.70
  11.24
  11.80
  12.39
  13.01
  13.66
  14.34
  15.06
  15.81
  16.61
  17.44
  18.31
  19.22
  20.18
  21.19
  22.25
  23.37
  24.53
  25.76
  27.05
  28.40
PV of cash for distribution, $m
 
  1,180
  663
  740
  802
  847
  876
  887
  881
  859
  823
  776
  718
  653
  584
  513
  442
  374
  310
  252
  200
  156
  119
  88
  64
  45
  31
  21
  13
  8
  5
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

CSX Corporation, together with its subsidiaries, provides rail-based transportation services in the United States and Canada. The company offers rail services, as well as transports intermodal containers and trailers. It transports agricultural and food products, fertilizers, chemicals, automotive, metals and equipment, minerals, and forest products; and coal, coke, and iron ore to electricity-generating power plants, steel manufacturers, and industrial plants. The company also exports coal to deep-water port facilities. In addition, it offers intermodal transportation services through a network of approximately 50 terminals transporting manufactured consumer goods in containers in the eastern United States; drayage services, including the pickup and delivery of intermodal shipments; and trucking dispatch services. Further, the company serves the automotive industry with distribution centers and storage locations, as well as connects non-rail served customers through transferring products from rail to trucks, which includes plastics and ethanol. Additionally, it acquires, develops, sells, leases, and manages real estate properties. The company operates approximately 21,000 route mile rail network, which serves various population centers in 23 states east of the Mississippi River, the District of Columbia, and the Canadian provinces of Ontario and Quebec, as well as owns and leases approximately 4,400 locomotives. It also serves production and distribution facilities through track connections. CSX Corporation was founded in 1978 and is based in Jacksonville, Florida.

FINANCIAL RATIOS  of  CSX (CSX)

Valuation Ratios
P/E Ratio 26.4
Price to Sales 4.1
Price to Book 3.9
Price to Tangible Book
Price to Cash Flow 14.9
Price to Free Cash Flow 70.4
Growth Rates
Sales Growth Rate -6.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -6.4%
Cap. Spend. - 3 Yr. Gr. Rate 0.7%
Financial Strength
Quick Ratio 3
Current Ratio 0.1
LT Debt to Equity 93.9%
Total Debt to Equity 96.7%
Interest Coverage 6
Management Effectiveness
Return On Assets 6%
Ret/ On Assets - 3 Yr. Avg. 6.6%
Return On Total Capital 7.6%
Ret/ On T. Cap. - 3 Yr. Avg. 8.7%
Return On Equity 14.7%
Return On Equity - 3 Yr. Avg. 16.6%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 74.9%
Gross Margin - 3 Yr. Avg. 71.5%
EBITDA Margin 42%
EBITDA Margin - 3 Yr. Avg. 40.4%
Operating Margin 29.6%
Oper. Margin - 3 Yr. Avg. 29.5%
Pre-Tax Margin 24.8%
Pre-Tax Margin - 3 Yr. Avg. 25.1%
Net Profit Margin 15.5%
Net Profit Margin - 3 Yr. Avg. 15.8%
Effective Tax Rate 37.5%
Eff/ Tax Rate - 3 Yr. Avg. 37.1%
Payout Ratio 39.7%

CSX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CSX stock intrinsic value calculation we used $11069 million for the last fiscal year's total revenue generated by CSX. The default revenue input number comes from 2016 income statement of CSX. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our CSX stock valuation model: a) initial revenue growth rate of 9.6% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 6.9%, whose default value for CSX is calculated based on our internal credit rating of CSX, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of CSX.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of CSX stock the variable cost ratio is equal to 58.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $1385 million in the base year in the intrinsic value calculation for CSX stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.6% for CSX.

Corporate tax rate of 27% is the nominal tax rate for CSX. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the CSX stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for CSX are equal to 277%.

Life of production assets of 23.6 years is the average useful life of capital assets used in CSX operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for CSX is equal to -2.2%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $11679 million for CSX - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 923.593 million for CSX is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of CSX at the current share price and the inputted number of shares is $45.1 billion.

RELATED COMPANIES Price Int.Val. Rating
NSC Norfolk Southe 118.63 30.06  str.sell
UNP Union Pacific 103.90 58.92  sell
GWR Genesee&Wyomin 65.56 37.34  sell
KSU Kansas City So 105.80 9.57  str.sell
CP Canadian Pacif 152.11 55.02  str.sell
CNI Canadian Natio 79.50 27.16  str.sell

COMPANY NEWS

▶ Intermodal Shipments Will Keep Climbing For Railroads   [Aug-18-17 11:18AM  Barrons.com]
▶ A Disciplined Approach to Infrastructure Investing   [Aug-12-17 11:03PM  Morningstar]
▶ Coal Revival: A Blessing for Railroads   [Aug-10-17 05:57PM  Zacks]
▶ CSX Corp. May Have More in the Tank   [08:36AM  TheStreet.com]
▶ Railroad Industry Stock Outlook - August 2017   [Aug-09-17 03:54PM  Zacks]
▶ Why Wall Street Has a Buy Mandate for Genesee & Wyoming   [Aug-08-17 10:37AM  Market Realist]
▶ Genesee & Wyomings European Revenues in 2Q17   [08:08AM  Market Realist]
▶ ETFs with exposure to CSX Corp. : August 4, 2017   [Aug-03-17 08:07PM  Capital Cube]
▶ CSX's Harrison: Service delays due to employees resisting change   [Aug-02-17 09:25AM  American City Business Journals]
▶ Cramer: Can the Pummeled Transports Get Back on Track?   [Jul-31-17 07:01PM  TheStreet.com]
▶ Union Pacific: Why Its Operating Margins Improved in 2Q17   [Jul-27-17 10:36AM  Market Realist]
▶ CSX Rail Down 5% on Shocking Conference Call   [Jul-26-17 10:15PM  Motley Fool]
▶ [$$] US railroads: deal coal bounce   [08:03PM  Financial Times]
▶ Cramer: Transports Getting Run Off the Road   [07:01PM  TheStreet.com]
▶ Inside Genesee and Wyomings European Volumes in June 2017   [Jul-25-17 10:37AM  Market Realist]
▶ CSX CEO drops bombshell during earnings call   [Jul-24-17 03:43PM  American City Business Journals]
▶ Behind Norfolk Southerns Intermodal Surge   [09:11AM  Market Realist]
▶ Inside Norfolk Southerns Freight in Week 28   [07:40AM  Market Realist]
▶ Game Theory Starts to Weigh on OPECs Production Cuts   [Jul-22-17 11:13AM  Motley Fool]
▶ Oil Prices Slip On Falling OPEC Compliance   [Jul-21-17 03:30PM  Oilprice.com]
▶ How CSX Is Returning Value to Shareholders   [10:38AM  Market Realist]
▶ Union Pacific Sees Higher Volumes In Second Half But Near-Flat Q3   [Jul-20-17 04:08PM  Investor's Business Daily]
▶ Believe It or Not, Coal Is Booming Right Now   [03:42PM  TheStreet.com]
▶ Why CSXs Intermodal Revenues Rose in 2Q17   [03:05PM  Market Realist]
▶ Boeing Is Now a Member in This Elite, High-Flying Club   [Jul-19-17 09:05PM  TheStreet.com]
▶ What Happened in the Stock Market Today   [04:54PM  Motley Fool]
▶ U.S. Crude Output Jumps To Highest In 2 Years; Inventory Falls   [04:44PM  Investor's Business Daily]
▶ Earnings movers in the blitz   [02:31PM  CNBC Videos]
▶ [$$] Coal has no future, says US railroad boss   [01:24PM  Financial Times]
▶ CSX CEO drops bombshell during earnings call   [12:30PM  American City Business Journals]
▶ Story Stocks from Briefing.com   [11:53AM  Briefing.com]
▶ Why CSX is Tanking   [11:36AM  Barrons.com]
Stock chart of CSX Financial statements of CSX
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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