Value
7.9/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 10.0 |
| P/S | 8.9 |
| EV/EBITDA | 9.8 |
| Fwd P/E | 9.6 |
| Analyst target | 4.0 |
- ▸Forward P/E: 8.1x
- ▸Attractively valued
CNX · Why this verdict
Why CNX Resources (CNX) is rated BUY WAIT
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictBUY WAIT
Overall score6.9/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
With 92% of production tied to natural gas and operations concentrated in the Appalachian Basin, the business carries compounded concentration risk—a single commodity price downturn and a single regional disruption could simultaneously impair revenue, asset values, and the earnings beat streak above. Bear case | Natural gas production share falls below 75% from the current 92% or revenue from outside the Appalachian Basin exceeds 20%, demonstrating meaningful diversification progress. | →Stable |
| CounterGeographic and commodity focus enables deep operational expertise and likely cost advantages in a specific basin; the wide economic moat may be precisely a function of this concentration rather than despite it. | ||
Free cash flow represents only 35% of net income, a level the data explicitly labels a red flag, meaning the company is reporting substantially more in earnings than it generates in cash—a gap that can mask balance sheet stress or capital intensity that does not appear in the income statement. Quality | Free cash flow conversion relative to net income rises above 60% for 2 consecutive quarters, narrowing the gap between reported earnings and cash reality. | →Stable |
| CounterFor exploration and production companies, the gap between net income and free cash flow often reflects ongoing reinvestment in productive assets; if those investments are generating the 28% revenue growth noted above, the lower cash conversion may be value-accretive. | ||
The company has beaten consensus estimates in each of the past four quarters, with an average upside surprise of 39.3% and analyst estimates rising 5.3% over the prior 30 days—a combination of consistent over-delivery and improving forward expectations that suggests the business is performing well ahead of Street models. Earnings | Average quarterly EPS surprise remains above 15% and analyst estimates continue rising over the next four reporting periods, sustaining the pattern of over-delivery. | →Stable |
| CounterAverage surprises of this magnitude in an energy company often reflect commodity price volatility rather than operational excellence; a meaningful drop in natural gas prices could reverse the direction of earnings surprises quickly without any change in management execution. | ||
The business carries a wide economic moat, 53% gross margins, 28% return on equity, a Piotroski financial strength score of 7 out of 9, and has demonstrated the combination of strong returns and growth the data associates with businesses that sustain compounding across market cycles. Quality | Gross margins remain above 45% and return on equity stays above 20% over the next four quarters, confirming the competitive position is durable. | →Stable |
| CounterFree cash flow represents only 35% of net income—an explicit red flag in the data—suggesting a material gap between reported earnings and cash generation that could mask reinvestment intensity or accrual-based distortions. | ||
Revenue has grown 28% year-over-year, a rate that scores at the top of the growth dimension, confirming the business is expanding its top line in absolute terms and not merely compounding profits on a static revenue base. Growth | Revenue growth remains above 10% year-over-year for 2 consecutive quarters, sustaining the expansion thesis even as the comparison base rises. | →Stable |
| CounterRevenue growth in an exploration and production business is heavily correlated to commodity prices; the 28% figure may reflect higher natural gas prices rather than volume growth, and a price reversal could quickly shrink the top line without any operational deterioration. | ||
With 92% of production tied to natural gas and operations concentrated in the Appalachian Basin, the business carries compounded concentration risk—a single commodity price downturn and a single regional disruption could simultaneously impair revenue, asset values, and the earnings beat streak above.
→StableBear case
- Expectation
- Natural gas production share falls below 75% from the current 92% or revenue from outside the Appalachian Basin exceeds 20%, demonstrating meaningful diversification progress.
CounterGeographic and commodity focus enables deep operational expertise and likely cost advantages in a specific basin; the wide economic moat may be precisely a function of this concentration rather than despite it.
Free cash flow represents only 35% of net income, a level the data explicitly labels a red flag, meaning the company is reporting substantially more in earnings than it generates in cash—a gap that can mask balance sheet stress or capital intensity that does not appear in the income statement.
→StableQuality
- Expectation
- Free cash flow conversion relative to net income rises above 60% for 2 consecutive quarters, narrowing the gap between reported earnings and cash reality.
CounterFor exploration and production companies, the gap between net income and free cash flow often reflects ongoing reinvestment in productive assets; if those investments are generating the 28% revenue growth noted above, the lower cash conversion may be value-accretive.
The company has beaten consensus estimates in each of the past four quarters, with an average upside surprise of 39.3% and analyst estimates rising 5.3% over the prior 30 days—a combination of consistent over-delivery and improving forward expectations that suggests the business is performing well ahead of Street models.
→StableEarnings
- Expectation
- Average quarterly EPS surprise remains above 15% and analyst estimates continue rising over the next four reporting periods, sustaining the pattern of over-delivery.
CounterAverage surprises of this magnitude in an energy company often reflect commodity price volatility rather than operational excellence; a meaningful drop in natural gas prices could reverse the direction of earnings surprises quickly without any change in management execution.
The business carries a wide economic moat, 53% gross margins, 28% return on equity, a Piotroski financial strength score of 7 out of 9, and has demonstrated the combination of strong returns and growth the data associates with businesses that sustain compounding across market cycles.
→StableQuality
- Expectation
- Gross margins remain above 45% and return on equity stays above 20% over the next four quarters, confirming the competitive position is durable.
CounterFree cash flow represents only 35% of net income—an explicit red flag in the data—suggesting a material gap between reported earnings and cash generation that could mask reinvestment intensity or accrual-based distortions.
Revenue has grown 28% year-over-year, a rate that scores at the top of the growth dimension, confirming the business is expanding its top line in absolute terms and not merely compounding profits on a static revenue base.
→StableGrowth
- Expectation
- Revenue growth remains above 10% year-over-year for 2 consecutive quarters, sustaining the expansion thesis even as the comparison base rises.
CounterRevenue growth in an exploration and production business is heavily correlated to commodity prices; the 28% figure may reflect higher natural gas prices rather than volume growth, and a price reversal could quickly shrink the top line without any operational deterioration.
TrendMatrix Research · core thesis
Engine thesis — one sentence
CNX Resources combines four consecutive quarterly earnings beats averaging a 39.3% upside surprise, 28% year-over-year revenue growth, and a wide economic moat with 53% gross margins, but 92% commodity concentration in natural gas from a single Appalachian Basin geography and free cash flow representing only 35% of net income introduce compounded concentration and cash-conversion risks that offset the strong underlying business quality.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
7.5/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 9.4 |
| ROA | 7.3 |
| Gross margin | 10.0 |
| Op margin | 10.0 |
| Net margin | 10.0 |
| Current ratio | 2.0 |
| FCF quality | 2.8 |
| Moat | 8.2 |
| Rule of 40 | 7.8 |
| Piotroski F | 7.8 |
- ▸Excellent ROE: 28%
- ▸Strong margins: 53%
- ▸Earnings quality RED FLAG: 35% FCF/NI
- ▸Wide economic moat
Growth
9.5/10data confidence 33%| Component | Sub-score |
|---|---|
| Rev growth | 9.5 |
- ▸Strong growth: 28% YoY
Momentum
5.7/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.4 |
| MACD | 10.0 |
| OBV | 6.7 |
| MA position | 5.2 |
| Volume | 3.3 |
- ▸Below 200-MA but MA still rising (+1.9%/30d) — pullback in uptrend, not confirmed weakness
Sentiment
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 3.0 |
| Analyst rating | 5.0 |
| Price target | 7.0 |
- ▸LLM news sentiment: -0.40 (n=1)
- ▸Contrarian divergence: +2.0 (bearish sentiment + deep value + high quality)
Insider
4.8/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| holder change | 5.1 |
- ▸Modest insider selling — $1,101,545 (0.023% of mkt cap)
Peer rank
6.0/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 7.1 |
| quality rank | 9.2 |
| growth rank | 7.7 |
- ▸Attractive P/E vs peers
- ▸Superior ROE vs peers
Technical
3.8/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 2.3 |
| support resistance | 3.5 |
| 52w position | 5.5 |
Risk (lower is worse)
4.8/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.3 |
| days to cover | 0.0 |
| volatility | 5.2 |
| put call | 0.1 |
| implied vol | 3.6 |
| beta | 9.5 |
| debt equity | 7.7 |
- ▸Short squeeze setup: 16% short, quality 7.5
- ▸Elevated put/call: 1.98
- ▸Concentration risks: 2 HIGH, 2 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
7.5/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 7.5 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| news activity | 5.0 |
- ▸Estimates up 5.3% (30d)
- ▸Perfect beat streak: 4Q
How the verdict was assembled
Engine trigger
Fundamentals strong but target reached (-0.7% upside).
Engine technical detail
verdict_path:
L4:PATH_A_VALUE_MOS33|V8:TARGET_REACHED|ENTRY_STICKY:PRIOR_STILL_VIABLEPassed (6)
- MOMENTUM:5.7>=5.5
- INSIDER:OK
- 8K:CLEAN
- EARNINGS_PROXIMITY:19d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.1=NEGATIVE
Warning (0)
none
Reward-to-Risk
-0.11
Upside
-0.7%
Downside
5.9%
Sizing output
STARTER
Setup— — No clear chart pattern; technical signals are mixed
EdgeCatalyst-Driven — Earnings in 19d with 4/4 beat streak
SuitabilityAggressive — MCap $4.8B<$5B
Investment implication
The STRONG_BUY_WAIT verdict reflects the ASYMMETRY gate's -0.1=NEGATIVE outcome against Growth at 9.5 and asymmetric R:R of -0.11.
The strongest dimensions are Growth at 9.5, Value at 7.9, and Quality at 7.5; the weakest are Technical at 3.8, Risk (lower is worse) at 4.8, and Insider at 4.8. The V9 engine flagged 1 failed gate, producing an asymmetric reward-to-risk of -0.11 and an engine sizing output of STARTER.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Exceptional Earnings Beat Streak
Trip ifEPS surprise falls below 0% for 2 consecutive quarters.
- P2High Quality Wide Moat Business
Trip ifGross margin compresses below 40% for 2 consecutive quarters.
- P3Strong Revenue Growth Trajectory
Trip ifRevenue growth falls below 10% YoY for 2 consecutive quarters.
- P4Geographic Commodity Concentration Risk
Trip ifNatural gas production share falls below 75% of total production.
- P5Fcf Below Net Income Red Flag
Trip ifFree cash flow relative to net income rises above 60% for 2 consecutive quarters.