CSX Corp. (NASDAQ:CSX)

Return on Assets (ROA)

The Return on Assets exhibits an increasing trend starting from 9.01% in March 2018, with slight fluctuations through 2019 where it dipped from 8.77% to 7.04% at the end of 2020. A gradual improvement followed in 2021 and 2022, reaching 9.94% in March 2023. Overall, the ROA shows a recovery and growth pattern, indicating improved efficiency in asset utilization over the observed period after a mid-cycle decline.

Financial Leverage

Financial leverage demonstrates a generally upward trend, starting at 2.60 in March 2018 and rising to 3.37 by March 2023. There are modest fluctuations, particularly a peak at 3.27 in September 2019 followed by a slight decrease through 2020 and some small variations thereafter. The persistent increase suggests a gradual increase in the use of debt relative to equity over the period.

Return on Equity (ROE)

Return on Equity trends upward overall, beginning at 26.34% in March 2018 and rising steadily with some volatility. It peaked around 28.68% in December 2018, dropped significantly in 2020 to 20.54%, followed by a continuous and strong recovery into 2023 reaching 34.84%. The pattern indicates resilient profitability relative to shareholder equity, improving substantially after 2020 lows.

General Insights

The data highlights a period of initial strong performance followed by reductions in profitability metrics around 2020, potentially linked to external challenges affecting the company’s performance. Both ROA and ROE bounce back notably post-2020, supported by steady leverage, implying successful strategic adjustments. Increasing financial leverage may have amplified returns to equity holders, but also indicates heightened financial risk exposure.

Net Profit Margin

The net profit margin data begins in March 2019 at 27.01% and demonstrates a relatively stable pattern around the high 20% range throughout the subsequent quarters. There is a slight declining trend from 27.9% in December 2019 to a low of 25.62% in March 2021. However, from there, the margin recovers and peaks near 30.26% by June 2021, maintaining close to 30% levels until December 2021, before experiencing a modest decrease to approximately 28% in the latest quarters ending in March 2023. Overall, profitability margins have been robust and predominantly steady with minor fluctuations.

Asset Turnover

Starting from March 2019 at 0.33, the asset turnover ratio experiences a gradual decline reaching a trough of 0.27 by December 2020. From this point forward, the ratio shows a consistent upward trend, increasing to 0.3 in mid-2021 and steadily rising to 0.37 by March 2023. This indicates enhanced efficiency in using assets to generate revenue over the longer term after a period of diminished turnover.

Financial Leverage

The financial leverage ratio displays an increasing trend beginning at 2.6 in March 2018 and rising steadily to around 3.27 by September 2019. Following this peak, it fluctuates slightly but generally remains within the 3.0 to 3.3 range through 2020 and 2021. In 2022 and early 2023, leverage rises again, reaching 3.37 by March 2023. This elevation in leverage suggests incremental increases in debt or financing used relative to equity over time, which may impact risk profile and capital structure.

Return on Equity (ROE)

The ROE starts from 26.34% in March 2019 and initially increases to a peak of 28.68% by December 2019. Thereafter, a declining trend is visible, dropping to approximately 20.54% by March 2021. Subsequently, ROE shows a notable recovery and increase over the next two years, reaching 34.84% by the first quarter of 2023. The upward movement in recent periods indicates improved overall profitability and efficient capital utilization, despite the earlier decline.

Tax Burden

The tax burden ratio has remained stable at approximately 0.77 throughout the periods from March 2019 to March 2023. This consistency indicates a relatively steady proportion of earnings retained after taxes over time.

Interest Burden

Interest burden exhibited a slight decline from 0.87 in early 2019 to around 0.83 by the end of 2020, suggesting a modest reduction in interest expense relative to earnings before interest and taxes. Following that, the ratio increased gradually to 0.88 by March 2023, indicating a slight rise in interest obligations or changes in earnings before interest and taxes.

EBIT Margin

The EBIT margin showed positive development initially, rising from about 40.35% in early 2019 to a peak near 45.9% in mid-2021. Afterward, a decline is observed, with the margin trending downwards to approximately 41.95% by March 2023. This pattern suggests periodical fluctuations in operational profitability, likely influenced by varying cost management or revenue conditions.

Asset Turnover

Asset turnover ratio has generally increased over time. Initially, it was around 0.33 in early 2019, followed by a gradual decrease to approximately 0.27 by late 2020, indicating reduced efficiency in generating sales from assets. However, from 2021 onward, there is a notable upward trend towards 0.37 by March 2023, reflecting improved asset utilization and sales generation capacity.

Financial Leverage

Financial leverage rose steadily from about 2.6 in March 2018 to 3.37 by March 2023. This increment reflects an increase in the use of debt relative to equity, which may enhance return on equity but also implies higher financial risk.

Return on Equity (ROE)

ROE showed a varied trend, increasing from approximately 26.34% in early 2019 to a peak near 28.68% by the end of that year. It then declined significantly to the low 20% range during 2020 but recovered after 2020 with continued growth, reaching 34.84% by March 2023. This overall increase in ROE is likely driven by improved operational performance combined with rising financial leverage, despite fluctuations in other ratios.

The financial data reveals several notable trends over the examined periods regarding profitability, efficiency, and asset utilization.

Net Profit Margin

The net profit margin remained steady around 27% during 2018 and 2019, experiencing a gradual decline toward the end of 2020 and early 2021, reaching approximately 25.6%. This decline suggests a moderate erosion in profitability relative to revenue during that time. However, starting in the first quarter of 2021, there was a clear upward trend, with margins increasing significantly to over 30% by late 2021. Following this peak, the margin slightly decreased but remained robust above 28% through to the first quarter of 2023, indicating sustained strong profitability.

Asset Turnover

The asset turnover ratio showed a mild decline from 0.33 in early 2018 to around 0.27 by the end of 2020, signaling a reduction in the efficiency with which assets were employed to generate revenue. From early 2021 onwards, there was a consistent improvement in this ratio, climbing steadily from 0.28 and reaching 0.37 by the first quarter of 2023. This upward movement suggests enhanced operational efficiency and higher revenue generation relative to asset base during the recent periods.

Return on Assets (ROA)

ROA mirrored patterns seen in the net profit margin and asset turnover. Initial data from 2018 to 2020 shows a declining trend from approximately 9% to a low near 6.8%, indicating weakening overall asset profitability. Commencing in early 2021, ROA showed significant recovery and incremental growth, passing 9% in late 2021 and gradually increasing to over 10% by the first quarter of 2023. This growth reflects improvements in both profitability and asset utilization, reinforcing a stronger return profile.

In summary, the data points to a period of reduced profitability and efficiency through 2018 to 2020, followed by meaningful improvements starting in 2021. Enhanced profit margins, rising asset turnover, and increased return on assets together illustrate a positive operational turnaround and improved financial performance in recent years.

Tax Burden

The tax burden ratio remained consistently stable at approximately 0.76 to 0.77 throughout the reported periods, indicating minimal fluctuations in the effective tax rate applied to earnings before tax.

Interest Burden

The interest burden ratio demonstrated a slight decline from 0.87 in early 2019 to about 0.83 in late 2020, suggesting a modest increase in interest expenses relative to earnings before interest and taxes. Subsequently, the ratio improved, reaching around 0.88 by early 2023, indicating a reduction in interest impact on profitability.

EBIT Margin

The EBIT margin showed an upward trend from roughly 40.35% in early 2019 to a peak near 45.9% in the second half of 2021. Following this peak, margins declined somewhat, stabilizing in the low 40% range by early 2023. This pattern reflects improved operating profitability up to 2021, followed by a partial contraction.

Asset Turnover

The asset turnover ratio displayed a gradual decrease from approximately 0.33 to 0.27 between early 2019 and late 2020, indicating reduced efficiency in generating revenue from assets. From 2021 onward, the ratio recovered steadily, reaching 0.37 by the first quarter of 2023, suggesting enhanced asset utilization.

Return on Assets (ROA)

The ROA trend mirrored changes in EBIT margin and asset turnover. It declined from around 9.01% in early 2019 to a low near 6.8% in late 2020, reflecting diminished profitability and efficiency during that period. Thereafter, ROA increased consistently, reaching over 10% by early 2023, indicative of improved overall asset profitability.

Tax Burden

The tax burden ratio remained stable over the reported periods, consistently around 0.76 to 0.77. There were no significant fluctuations observed, indicating steady effective tax rates throughout the timeframe.

Interest Burden

The interest burden ratio displayed minor fluctuations but remained generally stable. Starting at 0.87 in early 2019, it gradually decreased to 0.83 by the end of 2020, suggesting a slight reduction in interest expense relative to earnings before interest and taxes. From early 2021 onwards, the ratio increased gradually back to 0.88 by the first quarter of 2023, indicating some variability but no marked trend upward or downward over the full period.

EBIT Margin

The EBIT margin showed a positive trend with a gradual increase from approximately 40.35% in early 2019 to a peak of around 45.9% in the third quarter of 2021. Following that peak, there was a slight decline, settling in the low 40% range by early 2023. This suggests improved operational efficiency and profitability up to late 2021, with a mild contraction afterward.

Net Profit Margin

The net profit margin also exhibited an upward trend from about 27% in early 2019 to around 30.26% in mid-2021. After reaching this high point, the margin experienced a moderate decrease, leveling off near 28% from late 2021 through early 2023. This pattern reflects increasing profitability efficiency over the first two years, followed by a modest reduction but maintained profitability above earlier levels.