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Strategies & Market Trends : Value Investing
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To: benbuffett who wrote (50094)11/19/2012 12:48:45 PM
From: Spekulatius  Read Replies (1) of 78702
 
Re NSC and CSX - yes you can look The performance of both either way. NSC was a top performer within it's peers in terms of profit margins and went to be an average performer. CSX was the bottom of the barrel after the disastrous merger and now they are average with an apparent momentum for further increases (they plan to get from 30 to 35% in a couple of years. I think. They will succeed.

Another way if saying that NSC had better cash flow is that they are underinvesting. My observation with these RR companies is that while they move together in the short term, the long term performance can diverge quite a bit, just look at UNP versus CSX and NSC during the last 2 years. It appears to me that once such a trend in business performance: is established, it continues for a couple of years. The disastrous performance of CSX after the merger was another example of that, they did severe damage to their franchise, when they mismanaged the merger and created a self inflicted problem that took many years to resolve.
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