QS Research · Michael Burry's Scion Capital analyst template · 2006
CSX CORP (CSX)
As of 2026-11-06 · 12/15 boxes filled from SEC filings and market data
Conclusion: PASS
Conviction low · base case 0% · downside -17% · upside +18%
CSX is a high-quality eastern rail franchise with a narrow moat, but at $49.12 the market already pays 15.2x TTM EBITDA ($7.08B, N13/N25), 25.3x TTM P/E ($3.58B, N14/N27) and a 3.5% FCF yield ($3.21B, N17/N28), inside the Class-I peer band. The Q3 2026 operating recovery is real—revenue +12%, operating margin 39.1%, EPS $0.57, 9M FCF $2,648M—but the 880 bps GAAP margin gain is flattered by the prior-year $164M Quality Carriers goodwill impairment and management gives only qualitative guidance. On section 13's TTM-to-Sep-2026 base, 13.0x EBITDA gives $40.6 (-17%), 17.5x gives $57.9 (+18%), and today's 15.2x gives $49.05 (-0.1%): roughly 1:1 risk/reward, not the asymmetry a long or short requires. I pass; the business is better than FY2025 but not mispriced enough.
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. rail freight network: FY2025 revenue was $14.1B across merchandise ($8.8B, 62%), intermodal ($2.1B, 15%), coal ($1.9B, 13%), trucking ($816M, 6%) and other (4%). The oldest provided 10-K (FY2020) shows $10.6B revenue and only three primary rail lines; by FY2025 trucking/Quality Carriers is a named fourth line and the network, workforce and volumes are larger. XBRL data for FY2023-FY2025 shows revenue and operating income declining from $14.66B/$5.50B to $14.09B/$4.52B, while capex rose and buybacks fell.
- ✓ 2. Competitive advantage
CSX has a real but narrow moat: a physical rail network that competitors cannot replicate cheaply and a regulated common-carrier franchise, but it is a price-taker against Norfolk Southern and deregulated truckers on service and price, and the STB caps its freedom on routes, surcharges and rates. The financial record shows the moat is not currently widening: operating income fell from $5.50B (FY2023) to $4.52B (FY2025) while revenue only slipped from $14.66B to $14.09B, and capex rose to $2.90B (FY2025) from $2.26B (FY2023). Returns are high in absolute dollars but trending down, and the pending Norfolk Southern/Union Pacific combination is the single biggest structural threat on file.
- ✓ 3. 10-Q takeaways
Q3 2026 revenue rose 12% YoY to $4,017M on 5% higher volume and 7% higher revenue per unit, with operating income up 44% to $1,570M and operating margin 39.1% (+880 bps). The GAAP operating comparison was helped by the absence of the prior-year $164M Quality Carriers goodwill impairment; prior-year adjusted operating margin was 34.9%. 9M 2026 free cash flow before dividends was $2,648M versus $1,066M, buybacks were $1.0B, and liquidity was $1.6B at 9/30/2026. Operating service metrics deteriorated in Q3 2026, while the 10-Q risk list includes tariffs/international trade, fuel and labor items.
- ✓ 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.
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