Value
4.3/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 4.3 |
| P/S | 5.9 |
| EV/EBITDA | 2.1 |
| Fwd P/E | 5.8 |
| PEG | 4.3 |
| Analyst target | 3.0 |
- ▸Forward P/E: 22.4x
- ▸PEG: 2.23
CSX · Why this verdict
Why CSX (CSX) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.5/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Net margins of 22% and a Piotroski F-Score of 7 out of 9 reflect a financially sound franchise with above-average profitability for a capital-intensive railroad operation. Quality breakdown | Net margin holds above 20% and the Piotroski score stays at or above 7 over the next four quarters, confirming that the quality profile is durable. | →Stable |
| CounterFree cash flow converts at only 37% of net income — a red-flag level — suggesting a gap between reported earnings and actual cash generation; this may eventually require explanation through elevated capex or working capital moves that do not show up in the income statement. | ||
The company has beaten earnings estimates in 3 of the last 4 quarters — including the most recent print — with an average positive surprise of roughly 3.7%, demonstrating reliable delivery relative to street expectations. Earnings | Earnings beats continue in at least 2 of the next 3 quarters, with surprises averaging above 2% each period. | →Stable |
| CounterThe one miss in the window — a 5.3% shortfall — shows the company is not immune to estimate misses, and modest average surprises leave limited buffer if volume headwinds or cost pressures exceed expectations in any single quarter. | ||
The stock is trading above its take-profit resistance level of $47.07, and the reward-to-risk ratio has turned unfavorable, meaning the current price offers more downside than upside within the identified range. Price targets | Analyst consensus targets are raised above $52, creating more than 10% upside from the current $47.39 and restoring a positive risk/reward setup. | →Stable |
| CounterA golden cross formation with RSI at 57 and MACD in bullish territory indicates constructive underlying momentum; the stock may continue to trend higher and force analyst targets upward, turning the upside calculus more positive without a fundamental change. | ||
Free cash flow represents only 37% of net income, a level the analysis flags as a red flag for earnings quality, meaning a substantial portion of reported profits does not appear as cash available for reinvestment or shareholder returns. Quality breakdown | Free cash flow rises above 65% of net income for 2 consecutive quarters, demonstrating that the earnings-to-cash gap is not structural. | →Stable |
| CounterFor a railroad business with large recurring capital requirements, a lower-than-normal free-cash-flow-to-net-income ratio in any given period can reflect a cyclical maintenance or expansion cycle; if capital spending normalizes, conversion may recover without any underlying earnings quality concern. | ||
Net margins of 22% and a Piotroski F-Score of 7 out of 9 reflect a financially sound franchise with above-average profitability for a capital-intensive railroad operation.
→StableQuality breakdown
- Expectation
- Net margin holds above 20% and the Piotroski score stays at or above 7 over the next four quarters, confirming that the quality profile is durable.
CounterFree cash flow converts at only 37% of net income — a red-flag level — suggesting a gap between reported earnings and actual cash generation; this may eventually require explanation through elevated capex or working capital moves that do not show up in the income statement.
The company has beaten earnings estimates in 3 of the last 4 quarters — including the most recent print — with an average positive surprise of roughly 3.7%, demonstrating reliable delivery relative to street expectations.
→StableEarnings
- Expectation
- Earnings beats continue in at least 2 of the next 3 quarters, with surprises averaging above 2% each period.
CounterThe one miss in the window — a 5.3% shortfall — shows the company is not immune to estimate misses, and modest average surprises leave limited buffer if volume headwinds or cost pressures exceed expectations in any single quarter.
The stock is trading above its take-profit resistance level of $47.07, and the reward-to-risk ratio has turned unfavorable, meaning the current price offers more downside than upside within the identified range.
→StablePrice targets
- Expectation
- Analyst consensus targets are raised above $52, creating more than 10% upside from the current $47.39 and restoring a positive risk/reward setup.
CounterA golden cross formation with RSI at 57 and MACD in bullish territory indicates constructive underlying momentum; the stock may continue to trend higher and force analyst targets upward, turning the upside calculus more positive without a fundamental change.
Free cash flow represents only 37% of net income, a level the analysis flags as a red flag for earnings quality, meaning a substantial portion of reported profits does not appear as cash available for reinvestment or shareholder returns.
→StableQuality breakdown
- Expectation
- Free cash flow rises above 65% of net income for 2 consecutive quarters, demonstrating that the earnings-to-cash gap is not structural.
CounterFor a railroad business with large recurring capital requirements, a lower-than-normal free-cash-flow-to-net-income ratio in any given period can reflect a cyclical maintenance or expansion cycle; if capital spending normalizes, conversion may recover without any underlying earnings quality concern.
TrendMatrix Research · core thesis
Engine thesis — one sentence
CSX operates with strong operating leverage — 22% net margins and a Piotroski F-Score of 7 out of 9 — and has beaten earnings in 3 of the last 4 quarters, but the stock is trading above its take-profit resistance level with an unfavorable reward-to-risk ratio, leaving little justification for new capital at current prices.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 7.9 |
| ROA | 4.7 |
| Gross margin | 5.4 |
| Op margin | 10.0 |
| Net margin | 10.0 |
| Current ratio | 3.9 |
| FCF quality | 3.0 |
| Moat | 5.6 |
| Piotroski F | 7.8 |
- ▸Strong margins: 22%
- ▸Earnings quality RED FLAG: 37% FCF/NI
- ▸Strong Piotroski F-Score: 7/9
Growth
5.1/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 2.9 |
| EPS growth | 7.3 |
Momentum
7.5/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.0 |
| MACD | 9.4 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 4.0 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.5 |
| Price target | 4.5 |
| erm sentiment | 5.3 |
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸Insider selling (low materiality) — $6,848,764 (0.008% of mkt cap)
Peer rank
4.6/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 1.7 |
| quality rank | 6.1 |
| growth rank | 5.6 |
Technical
3.6/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.0 |
| support resistance | 0.8 |
| 52w position | 9.9 |
Risk (lower is worse)
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.9 |
| days to cover | 7.4 |
| volatility | 7.5 |
| put call | 10.0 |
| implied vol | 4.8 |
| beta | 6.2 |
| debt equity | 4.1 |
Catalyst
5.2/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 4.3 |
| dividend safety | 5.2 |
- ▸Strong earnings: 3B/1M
- ▸Dividend: 115.0%
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (6)
- MOMENTUM:7.5>=5.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:18d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-1.7=NEGATIVE
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-1.71
Upside
-13.1%
Downside
7.6%
Sizing output
AVOID
SetupBreakout — Golden cross, above all MAs, RSI 61, MACD bullish
EdgeCatalyst-Driven — Earnings in 18d with 3/4 beat streak
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 5.0 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Momentum at 7.5) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-1.7=NEGATIVE) reinforce the read. Current asymmetry R:R is -1.71 — supplementary context, not the trigger for this path.
The strongest dimensions are Momentum at 7.5, Risk (lower is worse) at 7.0, and Quality at 6.5; the weakest are Technical at 3.6, Value at 4.3, and Peer rank at 4.6. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of -1.71 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Consistent Earnings Beat Record
Trip ifEPS surprise falls below 0% for 2 consecutive quarters.
- P2Strong Operating Profitability
Trip ifNet margin falls below 18% for 2 consecutive quarters.
- P3Price Above Take Profit Target
Trip ifAnalyst consensus target rises above $52, creating more than 10% upside from the current $47.39 and restoring a positive reward/risk ratio.
- P4Weak Free Cash Conversion
Trip ifFree cash flow rises above 65% of net income for 2 consecutive quarters, falsifying the weak-conversion concern.