Watch the $$, not the shells that likely contain no “pea” at all when the time comes to make your guess.
A record $8 billion, 2 times the previous yr, was spent on stock buy backs this last yr. Ever ask yourself why when the sermon over the last years is always “we must control operational expenses to get to that operational ratio of 60% and then below (55) target? Doesn’t really justify $8 billion of new expenditures does it?
The money for the buy backs is all borrowed money that additionally acquiring interest expense that must be paid. The 8 billion does not count toward operational expense, nor does even the interest paid for the year on that capital. It never does, just the same it is a human capital expense paid, in stock shares, yearly, to C levels mainly.
PSR is only the pea supposedly under one of the shells. It is a thing of some substance, a “marker” but it not the real game target requiring asset sell offs, engine warehousing and human capital layoff events unrelated to efficiency exactly. The Money has all been moved outside of the game you have been burdened with and because it has been, something must be shown to carry the burden that the money would have had, the pea.
$8 billion + its future interest that was absolutely spent this past yr, over and above operational expense, must be paid for somewhere. Often it is by cutting human capital that does count toward capital expense, additionally it comes in other asset sell offs, warehousing and greater limiting of services provided to customers. The increments of gain appear so small, fractions of a percent in operational ratio because the starting vestment was so large. Not simple and easy to cover for even this last yr and 8billion + interest expenditure even with years before the full note due.
It is why CSX remained looking good on the books but, really suffered through layoffs, maintenance and keeping up with customer delivery expectations. It is not that you as a worker, or mark (player trying to follow the pea), are not important, it is just covering for that money that already outside the game and spent is more important. The gig is up and you are out of a job if too many come to understand the game you present to them. That pea: Moving cars not trains is logical, customer concern is how many of their cars made it on schedule not how many trains ran but, that only is not going to cover that 8billion dollar vestment. They have to do more, lots more…