CSX Dropped 5.1% In A Day. Have You Fully Evaluated The Risk?
CSX (CSX) stock is down 5.1% in a day. While history suggests price dips recover, there is risk – specific to growth, balance sheet and downturn resilience. Consider the following data:
- Size: A $61 Bil company with $14 Bil in revenue currently trading at $32.81.
- Fundamentals: Last 12 month revenue growth of -3.3% and operating margin of 34.9%.
- Liquidity: Has Debt to Equity ratio of 0.3 and Cash to Assets ratio of 0.0
- Valuation: Currently trading at P/E multiple of 19.7 and P/EBIT multiple of 12.5
- Has one instance since 2010 where it dipped >30% in < 30 days and subsequently returned 78% within a year. See CSX Dip Buy Analysis.
While we like to buy dips if the fundamentals check out – for CSX, see Buy or Sell CSX Stock – we are wary of falling knives. Specifically, it is worth trying to answer if things get really bad, and CSX drops another 20-30% to $22.97 levels, will we be able to hold on to the stock? What is the worst case scenario? We call it downturn resilience.
Below is a deep dive into CSX (CSX) downturn resilience – specifically, its performance vs the market during past crises? Turns out, the stock saw an impact slightly worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.
Below are the details, but before that, as a quick background: CSX provides rail-based freight transportation of chemicals, agricultural products, automotive goods, minerals, forest products, and metals across a 19,500-mile network in 23 eastern U.S. states.
2022 Inflation Shock
- 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.
- However, the stock fully recovered to its pre-Crisis peak by 22 February 2024
- Since then, the stock increased to a high of $38.38 on 4 March 2024 , and currently trades at $32.81
| CSX | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -29.9% | -25.4% |
| Time to Full Recovery | 499 days | 464 days |
2020 Covid Pandemic
- 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.
- However, the stock fully recovered to its pre-Crisis peak by 14 October 2020
| CSX | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -40.8% | -33.9% |
| Time to Full Recovery | 205 days | 148 days |
2018 Correction
- CSX stock fell 22.2% from a high of $25.17 on 27 August 2018 to $19.59 on 24 December 2018 vs. a peak-to-trough decline of 19.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 1 April 2019
| CSX | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -22.2% | -19.8% |
| Time to Full Recovery | 98 days | 120 days |
2008 Global Financial Crisis
- 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.
- However, the stock fully recovered to its pre-Crisis peak by 13 January 2011
| CSX | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -69.7% | -56.8% |
| Time to Full Recovery | 675 days | 1480 days |
Worried that CSX could fall much more? You could take a look at the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. 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.