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CSX Corp Stock Buy Recommendation Reiterated (CSX)

Stock quotes in this article: CSX

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK ( TheStreet) -- CSX (NYSE: CSX) has been reiterated by TheStreet Ratings as a buy with a ratings score of A- . The company's strengths can be seen in multiple areas, such as its attractive valuation levels, expanding profit margins, solid stock price performance and notable return on equity. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

  • EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass

Highlights from the ratings report include:

  • 37.30% is the gross profit margin for CSX CORP which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 15.36% trails the industry average.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • CSX CORP reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, CSX CORP increased its bottom line by earning $1.79 versus $1.67 in the prior year. For the next year, the market is expecting a contraction of 0.8% in earnings ($1.78 versus $1.79).
  • CSX, with its decline in revenue, slightly underperformed the industry average of 1.9%. Since the same quarter one year prior, revenues slightly dropped by 2.3%. Weakness in the company's revenue seems to not be hurting the bottom line, shown by stable earnings per share.

CSX Corporation, together with its subsidiaries, provides rail-based transportation services. It offers traditional rail services, and transports intermodal containers and trailers. CSX has a market cap of $24.81 billion and is part of the services sector and transportation industry. The company has a P/E ratio of 13.6, below the S&P 500 P/E ratio of 17.7. Shares are up 21.2% year to date as of the close of trading on Thursday.

You can view the full CSX Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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