Is There Now An Opportunity In CSX Corporation (NASDAQ:CSX)?

By
Simply Wall St
Published
June 14, 2021
NasdaqGS:CSX
Source: Shutterstock

Let's talk about the popular CSX Corporation (NASDAQ:CSX). The company's shares saw significant share price movement during recent months on the NASDAQGS, rising to highs of US$103 and falling to the lows of US$90.77. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether CSX's current trading price of US$97.29 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at CSX’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for CSX

What's the opportunity in CSX?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 13.08% above my intrinsic value, which means if you buy CSX today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth $86.03, then there isn’t really any room for the share price grow beyond what it’s currently trading. So, is there another chance to buy low in the future? Given that CSX’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

What kind of growth will CSX generate?

earnings-and-revenue-growth
NasdaqGS:CSX Earnings and Revenue Growth June 15th 2021

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to grow by 41% over the next couple of years, the future seems bright for CSX. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? It seems like the market has already priced in CSX’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping an eye on CSX, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

If you want to dive deeper into CSX, you'd also look into what risks it is currently facing. At Simply Wall St, we found 2 warning signs for CSX and we think they deserve your attention.

If you are no longer interested in CSX, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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Simply Wall St is focused on providing unbiased, high-quality research coverage on every listed company in the world. Our research team consists of data scientists and multiple equity analysts with over two decades worth of financial markets experience between them.