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Last update on 2024-06-06

CSX (CSX) - Piotroski F-Score Analysis for Year 2023 (Final Score: 5/9)

CSX Piotroski F-Score for 2023 reveals insights into profitability, liquidity, and operational efficiency with a final score of 5/9.

Knowledge hint:
The Piotroski F-Score is a number between 0 to 9 which reflects the strength of a company's financial position. It is based on 9 criteria involving profitability, liquidity, and leverage. This model helps investors identify stocks that are strong, undervalued investments.
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Short Analysis - Piotroski Score: 5

We're running CSX (CSX) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Criteria
Company has a positive net income?
1
Company has a positive cash flow?
1
Return on Assets (ROA) are growing?
0
Operating Cashflow are higher than Netincome?
1
Leverage is declining?
1
Current Ratio is growing?
0
Number of shares not diluted?
1
Cross Margin is growing?
0
Asset Turnover Ratio is growing?
0

CSX Corporation was analyzed using the Piotroski F-Score system. The Piotroski F-Score ranges from 0 to 9, with scores closer to 9 indicating a strong financial position. CSX achieved a Piotroski Score of 5, which implies average financial health. The analysis covered nine key areas such as profitability, liquidity, and operational efficiency. The key findings include positive net income and cash flow which drove CSX's score higher. However, the company scored lower in areas including Return on Assets, leverage, and asset turnover ratios, among others. These mixed results reveal some strengths in profitability but also highlight potential areas of concern in financial management and operational efficiency.

Insights for Value Investors Seeking Stable Income

CSX Corporation shows mixed financial health with a Piotroski Score of 5. While it has strong profitability and operational cash flow, lower scores in Return on Assets and increasing leverage and decreasing current ratio highlight potential financial and operational efficiency issues. Considering these mixed signals, it's a moderate investment opportunity. It merits further research into how the company is managing its assets and why there are declines in certain financial ratios before making a final investment decision.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of CSX (CSX)

Company has a positive net income?

Net income measures a company's profitability over a specific period. A positive net income indicates the company is profitable, while a negative net income suggests losses.

Historical Net Income of CSX (CSX)

The net income for CSX in 2023 is $3,715,000,000, indicating a substantial profit. Historically, CSX has maintained profitability over the last 20 years, even reaching peaks of over $5 billion in 2017 and maintaining over $3 billion in most years. This continued profitability reflects positively on CSX’s financial stability and performance. Therefore, CSX earns 1 point for maintaining a positive net income in 2023.

Company has a positive cash flow?

Cash Flow from Operations (CFO) reflects the amount of cash generated by a company's normal business operations, providing a clear picture of operational efficiency.

Historical Operating Cash Flow of CSX (CSX)

CSX's Cash Flow from Operations (CFO) for 2023 is positive, standing at $5.549 billion. Given the Piotroski score criterion, a positive CFO adds 1 point to the score, indicating a healthy cash generation from operations. This trend is consistent as CSX has exhibited positive cash flow from operations over the past 20 years, reflecting a strong operational structure and efficiency. Notably, the values have shown substantial growth from $804 million in 2003 to the present figure, indicating sustained operational efficiency and potentially strong internal finance management.

Return on Assets (ROA) are growing?

The Change in Return on Assets (ROA) measures a company's efficiency in generating profits from its assets. An increasing ROA suggests improved profitability and operational efficiency, which is favourable for investors.

Historical change in Return on Assets (ROA) of CSX (CSX)

The ROA of CSX in 2023 is 0.0881, compared to 0.1011 in 2022. This indicates a decrease in ROA for the year 2023. As a result, under the Piotroski F-Score criteria, this would assign a score of 0 for the Change in ROA category. An improving ROA is typically positive as it reflects better utilization of assets to generate earnings. Nevertheless, CSX has shown fluctuations over the past two decades and has often remained below the industry median ROA, which was 0.3176 in 2023. Despite this, CSX's operating cash flow has been relatively strong, increasing from $804 million in 2003 to nearly $5.55 billion in 2023, indicating robust operational efficiency despite the recent dip in profitability.

Operating Cashflow are higher than Netincome?

Explain the criterion for CSX (CSX) and why it is important to consider

Historical accruals of CSX (CSX)

CSX Corporation's operating cash flow has been consistently higher than its net income. In 2023, the operating cash flow was $5,549 million compared to a net income of $3,715 million, which adds 1 point to the Piotroski Score. This trend is crucial because it indicates efficient business operations and solid earnings quality. Additionally, maintaining higher operating cash flow than net income over 20 years suggests robust cash-generating capability and a financially stable business model.

Liquidity of CSX (CSX)

Leverage is declining?

The Change in Leverage criterion measures the change in financial leverage of the company over the last year. It is important to assess how a company is managing its debt relative to its equity.

Historical leverage of CSX (CSX)

In the case of CSX (CSX), Leverage has increased from 0.4354 in 2023 compared to 0.4386 in 2022. Given that Piotroski's analysis rewards a reduction in leverage, the increase in leverage means that this particular criterion would score 0 points. Historically, CSX has demonstrated varied leverage levels over the last 20 years, with a clear uptrend since 2015. The culmination of this rising trend, highlighted by the marginal increase in the most recent year, suggests a possible strategic increase in leverage. However, for the Piotroski score, this still represents a less favorable trend.

Current Ratio is growing?

The Current Ratio measures a company's ability to cover its short-term liabilities with its short-term assets.

Historical Current Ratio of CSX (CSX)

In 2023, CSX reported a Current Ratio of 1.0496, which is a decrease from the 2022 Current Ratio of 1.5577. This decrease does not meet the criteria for an increase, and hence we assign 0 points for this category. Analyzing this trend in comparison with industry medians over the past 20 years reveals that CSX's Current Ratio of 2023 lags behind the industry median of 1.197. A declining Current Ratio below the industry median suggests deteriorating liquidity, which could affect the company's short-term financial stability. Trends reflect that although CSX has experienced fluctuations, a significant drop between 2022 and 2023 could indicate inefficiencies in managing current assets and liabilities.

Number of shares not diluted?

Change in Shares Outstanding reflects the company's equity structure adjustments, such as share repurchases or issuances. A decrease in outstanding shares suggests company confidence conveyed through buybacks.

Historical outstanding shares of CSX (CSX)

For CSX (CSX), the outstanding shares decreased from 2.136 billion in 2022 to 2.008 billion in 2023. This constitutes a decrease in outstanding shares, adding 1 point to the Piotroski score. This trend is seen positively because it indicates share buybacks, suggesting that the company is using cash reserves to buy back shares, which often signals management's confidence in future performance. Over the last 20 years, this trend has been consistent, showing a significant reduction from around 3.859 billion shares in 2003.

Operating of CSX (CSX)

Cross Margin is growing?

Change in Gross Margin measures the percent of revenue that exceeds the cost of goods sold, indicators for competitive advantage, and cost efficiency.

Historical gross margin of CSX (CSX)

When comparing the Gross Margin of 0.3771 in 2023 with the Gross Margin of 0.3895 in 2022, it is evident that the Gross Margin has decreased slightly. This decline translates to a score of 0 for this Piotroski criterion. Although a marginal decrease, it is important to scrutinize gross margin trends over a more extended period. Historically, CSX's Gross Margin has seen fluctuations—from highs such as 0.7305 in 2009 to lows like 0.2852 in 2013. More recently, the downward trend from 0.5217 in 2019 to 0.3771 this year suggests potential issues in cost management or competitive pressures. In contrast, the industry median Gross Margin of 0.3176 in 2023 versus 0.2944 in 2022 indicates a stronger competitive landscape with the industry improving efficiency. This paints a predicament for CSX as it's underperforming relative to the industry's trends.

Asset Turnover Ratio is growing?

Asset Turnover measures a company's ability to generate sales from its assets. It is calculated by dividing sales revenue by total assets. A higher ratio implies effective utilization of assets.

Historical asset turnover ratio of CSX (CSX)

The Asset Turnover ratio for CSX in 2023 is 0.3477, a decrease from 0.3603 in 2022, indicating a less efficient use of assets to generate sales. This trend is concerning as it reflects a downward trajectory in operational efficiency. Historically, the last 20 years show variability, but the recent decline may suggest challenges in maintaining competitiveness. For this criterion, CSX scores 0 points.


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