QS Research · Michael Burry's Scion Capital analyst template · 2006
CSX CORP (CSX)
As of 2026-11-08 · 12/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction low · base case +5% · downside -15% · upside +14%
Section 13's base is the right one - TTM to 2026-09-30 EBITDA of $7.08B and net income of $3.58B - but its cases were marked at peer P/E bounds (UNP 22.6x, CP 29.3x); at CSX's own 15.2x EV/EBITDA the three cases must swing on EBITDA, not on the multiple. Base $51.77 (+5%): nine-month 2026 operating income $4,329M annualized to $5,772M plus $1,640M D&A = $7.41B at 15.2x, less $17.20B net debt, over 1,843.40M shares. Upside $55.97 (+14%): Q3 2026 operating income $1,570M annualized to $6,280M plus D&A = $7.92B. Downside $41.79 (-15%): a full reversal to FY2025's $4.52B operating income plus $1.68B D&A = $6.20B. What the market is not missing is the recovery - a 39.1% Q3 2026 margin and nine-month FCF before dividends of $2,648M versus $1,066M are visible and already paid for at 25.3x TTM earnings - it is the fragility: a $170M fuel headwind absorbed, dwell up 12% and on-time arrivals down to 56%, and the primary rail rival merging with Union Pacific. With base +5.4% and a -14.9%/+13.9% range, neither the long nor the short rule is met: watch, low conviction.
Key numbers
- Share price: $49.12
- Market cap: $90.55B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $14.94B
- EV / EBITDA (TTM): 15.2x
- P/E (TTM): 25.3x
The 15 boxes
- ✓ 1. Long-form business notes
CSX is an eastern U.S. Class I railroad whose FY2025 revenue of $14.1B came from merchandise (62% of revenue), intermodal (15%), coal (13%), trucking (6%) and other (4%); by FY2025 it reports four primary lines versus three in FY2020, with trucking and Quality Carriers appearing in the FY2025 disclosure. FY2023-FY2025 revenue, operating income, net income and operating cash flow all declined from FY2023 levels, while capex rose and buybacks and diluted shares fell. The network and workforce are larger in FY2025 than FY2020, and the operating model remains a scheduled service plan aimed at customer service, asset optimization and free cash flow.
- ✓ 2. Competitive advantage
CSX owns a network that competing modes do not have to pay for - motor carriers, barges, ships and pipelines run on public rights-of-way while CSXT builds and maintains its own rail network largely with internal resources - and the STB's rate/route jurisdiction is a genuine licence barrier. But the moat is not producing improving returns: operating income fell from $5.50B in FY2023 to $5.25B in FY2024 and $4.52B in FY2025 while revenue fell only from $14.66B to $14.09B, and capex rose from $2.26B to $2.90B over the same three years. Its main rail rival, Norfolk Southern, agreed during 2025 to merge with Union Pacific into what would be the only transcontinental US rail network, pending STB approval, while deregulated truckers compete on the same routes.
- ✓ 3. 10-Q takeaways
Q3 2026 (quarter ended 2026-09-30) was a record revenue quarter: $4.02 billion, up 12% year over year, on 5% higher volume (1.69 million units) plus fuel surcharge and pricing, with operating income of $1.57 billion (+44%) and operating margin of 39.1% (+880 bps). Part of the margin jump is lapping, not operating: Q3 2025 carried a $164 million Quality Carriers goodwill impairment, and against Q3 2025 adjusted operating income of $1.25 billion the increase is 25%, not 44%. Fuel was a $170 million headwind (locomotive fuel prices +67%), cash generation was strong (nine-month FCF before dividends $2,648 million versus $1,066 million), and the only numeric outlook is capital investment: 2026 planned capex under $2.4 billion. The October 21 earnings release gave no numeric revenue or EPS guidance, only qualitative CEO comments.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
Sign in with a QuantSignals Premium or Gold plan to read every box: each point linked to the SEC filing it came from, the bull and bear case, and the comparables. QS Research powers the signals behind FST, our autonomous trading agent.