NEW YORK (TheStreet) -- Railroad stocks have been ripping higher all year.
Just go down the list and you'll see. Canadian Pacific (CP - Get Report) is up 21% on a year-to-date basis. Union Pacific (UNP - Get Report) is up 20%, Norfolk Southern (NSC - Get Report) 13%, CSX (CSX - Get Report) 10%, Canadian National Railway (CNI - Get Report) 15% and GATX (GMT - Get Report) 36%.
When you add up the increase in market cap for all of the railroad stocks we just mentioned, the figure exceeds $50 billion. The Dow Jones U.S. Railroad Index is at an all-time high and the chart is absolutely tantalizing.
"We rate CSX CORP (CSX) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth, reasonable valuation levels and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Compared to its closing price of one year ago, CSX's share price has jumped by 28.98%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, CSX should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- Despite its growing revenue, the company underperformed as compared with the industry average of 9.2%. Since the same quarter one year prior, revenues slightly increased by 1.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The debt-to-equity ratio is somewhat low, currently at 0.88, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.81 is somewhat weak and could be cause for future problems.
- CSX CORP's earnings per share declined by 11.1% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CSX CORP increased its bottom line by earning $1.83 versus $1.79 in the prior year. This year, the market expects an improvement in earnings ($1.87 versus $1.83).
- You can view the full analysis from the report here: CSX Ratings Report