CSX's Discount Won't Last Forever

CSX (CSX), a railroad that operates primarily in the eastern U.S., will reports second-quarter earnings after the close today, and the consensus is that the company earned $0.47 a share, compared with $0.49 a year ago, a very respectable result considering the significant year-over-year decline in utility coal volumes. The company's exposure to utility coal has weighed heavily on the share price, which has significantly underperformed its railroad peer group over the past year.

After terrible relative stock market performance in 2012, when its shares were down 19%, CSX has bounced back this year, gaining 24.2%. But even after this year's rebound, CSX is trading at a big discount to its peer group and to the market. At 13.8x  2013's earnings estimates and 12.2x next year's estimate, and a 2.45% dividend yield, the shares offer good value today with a chance for multiple expansion and earnings growth as the economy improves and coal volume comparisons get easier....270 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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