It is as usual an emotional over-reaction. The reaction was more to the Executives stating that their estimates of Net Income growing 10-15% through 2015 were probably too aggressive. Related to the Coal Downturn but not entirely as they indicated before they would offset the downturn in other ways now they are saying the decline is too rapid and too fast or they cannot grow other business fast enough to fill the hole.
At any rate my feeling is Management was being cautious and investors read it as a kind of throwing in the towel. I still am bullish on the stock. It will recover some value lost in a week or two from where it is now. CSX has a lot of infrastructure projects in the works as well as there are some public projects it should benefit from such as:
1. Trackage rights on Louisville to Indianapolis line and improvement of that line to 40 mph from 20.
2. Tunnel improvement projects that will allow increasing use of double stack container trains.
3. Oil shipments, agree it is too early to tell if these will continue to increase but they are definitely going to stay on the rails and increase on the rails (just not sure at what rate). Advantages of flexibility in using rail for these crude shipments far outweigh pipelines. Feds are moving towards approving increased tanker car safety standards but that is going to take a year at least to go through but my feeling is it will be retroactively applied once it does go through. Rails should benefit from that.
4. Panama Canal widening - always thought this was overblown. For one we have seen this phenomena before when the St. Lawerence Seaway opened a lot of the Midwestern Roads (a lot that have passed on via liquidation and merger) spent money to improve their lines from the ports of Milwaukee, Green Bay, Superior, etc.............traffic never materialized as expected. So I am a little more cautious on if this will really benefit CSX or not.