CSXCSX

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Company Background Stock Price Major Competition Micro and Macro Environment Intensity of Rivalry S.W.O.T Analysis Recommendation

Agenda

Buy CSX @ $23.80 Price target

DCF: $26.___ Comps: $24.__-$___

Recommendation

Recent upgrades by FBR Capital & RBC Avg. price target $26.54 Median price target $27.00

Analyst Ratings

Stock Price – Last 5 Years

2008 2009 2010 2011 2012

Highs $ 70.70 $ 50.80

$ 21.60

$ 27.06 $ 23.71

Lows $ 30.61 $ 20.70

$ 14.02

$ 17.69 $ 18.88

Dividends $ 0.77 $ 0.88 $ 0.98 $ 0.45 $ 0.54

6

Business

Provides rail-based transportation in 23 states in the eastern US

Operates various distribution centers & connects non-rail customers through transferring products to trucks

Approx. 21,000 miles of rail in the eastern US as well as Ontario and Quebec

Main items transported include: Crushed stones, food, consumer, agriculture,

chemical products and coal6

Financial Info Sheet

NYSE: CSX Sales: $11.756B Fuel: $1.672B

14.2225% of sales Labor & Fringe:

$3.02B 25.689% of sales

Market Cap: $ 24.44B Price/Trailing Earnings: Price/Forward Earnings: Price/Sales: Price/Book:

Major Comparables Union Pacific Corp Market Cap: $65.57B

Canadian National Railway Company

Market Cap: $42.01B

Norfolk Southern Market Cap: $23.70B

Canadian Pacific Railway Limited

Market Cap: $21.99B

Sully

Comparable

Strengths: Capable of reaching 2/3rds of

Americans Ability to transport a diverse portfolio:

Grains, chemicals, autos, metals, paper, consumer products

Weakness: Increases in passenger train volume Poor economic conditions Increase regulation Severe weather Liability of hazardous material

S.W.O.T. Analysis

Opportunities:

Increase in global competiveness Continued growth in manufacturing and energy Provide the most fuel efficient way to ship

Threats: Disruption in supply chain

Could increase prices Fuel shortage by OPEC Terrorism

S.W.O.T. Analysis

Threat of Entry

Location Advantages Government Subsidies

Buyer Power Who are the buyers?

Supplier Power Who are they Easily integrate forward?

Porter’s 5 Forces

Threat of Substitute

How close are the substitutes?

Intensity of Rivalry

Porter’s 5 Forces cont.

Decline in coal Droughts Diversify away from coal Advancing product offering

News Worthy Material

GDP: Last Year $15.66 Trillion (2.2%, YOY) Operations cover, Eastern U.S., Ontario and

Quebec 21,000 mi. of Track Access to 70 Ports

Fuel is the largest input for CSX Monitor fuel prices

Political: EPA influential regulating body Global: Economic conditions affect demand on

commodities

Micro Environment

Decline in coal due milder weathers

Macro Environment

Sully

Recommendation