Time To Buy CSX Stock?

CSX (NASDAQ:CSX) stock saw a 5% jump in after-market hours on July 16, following a Semafor report that Union Pacific (NYSE: UNP) is exploring an acquisition of an East Coast railroad. Both CSX and Norfolk Southern (NYSE: NSC) operate in this region, and Union Pacific has reportedly hired Morgan Stanley (NYSE:MS) to advise on potential options. This news provided a significant boost to CSX’s stock, as investors anticipate a potential takeover premium.

However, the question for investors remains: Does CSX stand as a strong buy at its current price of around $35, irrespective of acquisition speculation? To answer this, we’ve analyzed CSX’s financial and operational performance.

Based on our assessment of CSX’s valuation against its recent operating performance and historical financial health, we believe CSX presents a good buying opportunity at its current price.

Our in-depth analysis, focusing on key parameters such as Growth, Profitability, Financial Stability, and Downturn Resilience, indicates that CSX currently exhibits moderate operating performance and financial condition. Crucially, this moderate performance is coupled with a moderate valuation, making it an attractive prospect, as detailed in the following sections.

However, for investors who seek lower volatility than individual stocks, the Trefis High Quality portfolio presents an alternative — having outperformed the S&P 500 and generated returns exceeding 91% since its inception. Separately, see – D-Wave Quantum: Can QBTS Stock Deliver Another 1,000% Gain?

Image by Ernie A. Stephens from Pixabay

How Does CSX’s Valuation Look vs. The S&P 500?

Going by what you pay per dollar of sales or profit, CSX stock is currently valued in line with the broader market.

• CSX has a price-to-sales (P/S) ratio of 4.5 vs. a figure of 3.1 for the S&P 500
• Additionally, the company’s price-to-free cash flow (P/FCF) ratio is 23.7 compared to 20.9 for S&P 500
• And, it has a price-to-earnings (P/E) ratio of 19.8 vs. the benchmark’s 26.9

How Have CSX’s Revenues Grown Over Recent Years?

CSX’s Revenues have seen a decline over recent years.

• CSX has seen its top line grow at an average rate of 3.2% over the last 3 years (vs. an increase of 5.5% for S&P 500)
• Its revenues have shrunk 2.4% from $15 Bil to $14 Bil in the last 12 months (vs. growth of 5.5% for S&P 500)
• Also, its quarterly revenues shrank 7.0% to $3.4 Bil in the most recent quarter from $3.7 Bil a year ago (vs. 4.8% improvement for S&P 500)

How Profitable Is CSX?

CSX’s profit margins are much higher than most companies in the Trefis coverage universe.

• CSX’s Operating Income over the last four quarters was $5.1 Bil, which represents a considerably high Operating Margin of 35.7%
• CSX’s Operating Cash Flow (OCF) over this period was $5.4 Bil, pointing to a high OCF Margin of 38.1% (vs. 14.9% for S&P 500)
• For the last four-quarter period, CSX’s Net Income was $3.2 Bil — indicating a high Net Income Margin of 22.7% (vs. 11.6% for S&P 500)

Does CSX Look Financially Stable?

CSX’s balance sheet looks weak.

• CSX’s Debt figure was $20 Bil at the end of the most recent quarter, while its market capitalization is $63 Bil (as of 7/16/2025). This implies a moderate Debt-to-Equity Ratio of 30.5% (vs. 19.4% for S&P 500). [Note: A low Debt-to-Equity Ratio is desirable]
• Cash (including cash equivalents) makes up $1.1 Bil of the $43 Bil in Total Assets for CSX.  This yields a poor Cash-to-Assets Ratio of 2.7%

How Resilient Is CSX Stock During A Downturn?

CSX stock has fared worse than the benchmark S&P 500 index during some of the recent downturns. Worried about the impact of a market crash on CSX stock? Our dashboard How Low Can CSX Stock Go In A Market Crash has a detailed analysis of how the stock performed during and after previous market crashes.

Inflation Shock (2022)

• CSX stock fell 29.9% from a high of $37.80 on 30 March 2022 to $26.51 on 11 October 2022, vs. a peak-to-trough decline of 25.4% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 22 February 2024
• Since then, the stock has increased to a high of $38.38 on 4 March 2024 and currently trades at around $33

COVID-19 Pandemic (2020)

• CSX stock fell 40.8% from a high of $26.82 on 20 February 2020 to $15.89 on 23 March 2020, vs. a peak-to-trough decline of 33.9% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 14 October 2020

Global Financial Crisis (2008)

• CSX stock fell 69.7% from a high of $7.67 on 30 May 2008 to $2.32 on 9 March 2009, vs. a peak-to-trough decline of 56.8% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 13 January 2011

Putting All The Pieces Together: What It Means For CSX Stock

In summary, CSX’s performance across the parameters detailed above is as follows:

• Growth: Weak
• Profitability: Very Strong
• Financial Stability: Weak
• Downturn Resilience: Weak
• Overall: Neutral

Overall, CSX stock currently presents a neutral performance across our key parameters, which aligns with its moderate valuation. While the company boasts solid profitability, its revenue growth has recently been hampered by challenging macroeconomic conditions.

However, with inflation now under control and the Federal Reserve anticipated to cut interest rates sooner rather than later, we expect a surge in overall economic activity. This should significantly benefit CSX in the coming years. In fact, after a muted 2025, we project mid-single-digit top-line growth for CSX in the next few years.

Given these factors and CSX’s current moderate valuation, we believe it offers a favorable entry point for investors. The added dimension of being a potential acquisition target only enhances its appeal, although it’s important to acknowledge the inherent risks associated with regulatory approvals in such a scenario.

Of course, our assessment could be incorrect, and investors might remain hesitant to assign a higher multiple to CSX due to its recent weaker growth. Nevertheless, for long-term investors with a 3-5 year time horizon, the overall risk-reward profile for CSX appears favorable.

While CSX stock looks promising, investing in a single stock can be risky. On the other hand, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.

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