The last time we pulled into this station, rail operator CSX (NYSE: CSX) was reporting strong operating income, despite soft volumes on all things housing-related. Nine months later, the song remains the same, but earnings are really starting to scream.

For the quarter, CSX's revenue ripped 12% higher, aided by strength in agricultural products, fertilizers, and coal. Revenue in each of those segments rose 20% or better. Same-store sales growth of 6.8% was the envy of rundown retailers everywhere, while growth in revenue per unit (a measure of operating efficiency) was smoking. On a comparable basis, operating income leaped 34%, while per-share earnings erupted by 60%.

To be fair, CSX noted in its presentation that part of the leap in operating income stemmed from derailments in the prior year. "Core" earning power was still up 25% after backing out that $38 million impact.

A major contributor to this result was the company's ability to hold nonfuel expenses flat; they were actually down 1% from last year. Also, while fuel costs flew 55%, surcharges to customers minimized the impact on earnings.

Those surcharges are at the heart of a lawsuit filed recently by Archer Daniels Midland (NYSE: ADM), which alleges that the Big 5 -- the other four being Burlington Northern Santa Fe (NYSE: BNI), Norfolk Southern (NYSE: NSC), Union Pacific (NYSE: UNP), and Kansas City Southern (NYSE: KSU) -- have colluded on fuel price increases. I think ADM will have a tough time nailing the railroads on this one, but we'll have to wait and see.

CSX's financial fortitude allowed the company to buy back another $300 million worth of shares in the quarter, which takes the running total close to the $3 billion mark. The regal rail is ready to retire another $3 billion or so by the end of next year, which will help edge earnings ever higher. That industrywide earning power is not to be underestimated. Between CSX, the rest of the Big 5, and Canadian National Railway (NYSE: CNI), investors have a lot to be enthusiastic about.

Related Foolishness:

  • Canadian National made it all the way to the Foolish Final Four.
  • My own powerhouse pick was upset by the very same company in the Elite Eight.
  • At least I knew I was up against a company that's right on track.

Fool contributor Toby Shute hears that buying all the railroads is a winning strategy in Monopoly, but he doesn't have a position in any company mentioned. The Motley Fool has a disclosure policy.