By Kyler Hasson:
CSX Corporation (NYSE:CSX) has been a strong performer since late 2012, with shares going from about $19 to $29, while earnings have remained about flat. Even with these relatively poor business results and the large run-up in the share price, I believe that shares offer substantial value around $29 and should more than double by the end of 2018. While most investors value railroads mainly on a P/E basis, I think that it is immensely important to look at the level of profitability of a railroad’s assets and in what direction that profitability is going.
Here is an example: in early 2006, Union Pacific (NYSE:UNP) had net income of about $1 billion, and the company was worth around $22 billion. Today, the company is worth about $89 billion with $4.7 billion in net income. This was obviously amazing performance, with net income increasing by 19.6% per year. When I see