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In the wake of J.B. Hunt's (JBHT) better-than-expected Q3 earnings report on Tuesday night, which featured a return to positive volume growth for its intermodal business, hopes were high that railroad operator CSX's (CSX) Q3 results followed the same track. That wasn't the case, however, as CSX fell short of EPS estimates and lowered its Q4 expectations for volume and revenue growth. Specifically, CSX guided for revenue to be down moderately on modest volume growth. Previously, the company was anticipating mid-single-digit growth for both revenue and volume in 2H24. 

• Unfortunately, the modest momentum that the company saw in its intermodal business faded a bit as revenue dipped by 2% to $509 mln (14% of total Q3 revenue) and volume grew by just 3% in Q3 compared to last quarter's 5% growth. The outlook for Q4 doesn't look much better, either, with CSX forecasting slower yr/yr growth for intermodal volumes, reflecting seasonality and a weak domestic trucking market that's grappling with soft pricing.
• A struggling intermodal business isn't the only headwind that CSX is contending with. Due to low natural gas prices and a sluggish steel industry, demand for coal has weakened, weighing on volumes. Following last quarter's 3% drop in coal volume (-12% for revenue), CSX saw coal volumed decline by 2% this quarter (-7% for revenue), driven by a challenged domestic coal market.
• On a more positive note, new business wins and stability in some key markets, such as chemicals, ag/food products, auto, and forest products, pushed merchandise volume higher by 3%. The result is especially encouraging given that the recent hurricanes had a negative impact.
• Furthermore, despite the tough business conditions, EPS still grew by 12% yr/yr to $0.46, while operating margin expanded by 180 bps yr/yr to 37.4%. Lower fuel and PS&O (Purchased Services & Other) expenses helped drive the improved profitability.

Overall, CSX's results and outlook were decent considering the macroeconomic environment, but growth remains lackluster, and its performance doesn't elicit much excitement for peers Union Pacific (UNP), Canadian Pacific Kansas City (CP), and Norfolk Southern (NSC) when they report earnings on October 24, October 23, and October 22, respectively.