NB: thank you to @Wini for his work which informed and inspired my interest and analysis.

CSX requires sales growth of 20-30% to pivot into profitability in the next year or two and should see profit grow at around twice (in dollar terms) that of sales if it can maintain this growth rate. This is in contrast with the last 3 years where profitability has improved faster than sales due to significant cost reductions from restructuring the business, which is now mostly complete, hence no longer going to occur.

Take the below projection, assuming 30% sales growth, but expenses also start increasing at 6% in FY25 then by half sales growth and compare to an extrapolation of the FY22-FY25 projection of profit:

With around $7m in net cash and FCF break even due to low capital cost requirements, the business shouldn’t need to raise further capital and may be in a position to pay a dividend in a few years provide growth targets are achieved. Trading at 2x Sales with possible 20%+ net profit margins at scale, the current price is reasonable/cheap, but conditional on aggressive growth assumptions and upside will take several years to translate into PE rations the market will see as appealing and be willing to pay.

Instability of performance over it’s listed history and lack of tangible metrics to value the company as it pivots into profitability provides opportunities for investing at low valuations, but also likely to provide high volatility in price movements over the coming year as sentiment changes.

As such I am open to buying at below $0.40 but I am looking for additional support for the assumption that sales will grow at 30% or there abouts for the next 3-4 years. Good US market execution could do this as well as indication that growth in Europe is likely to continue despite conditions there.

So this is a thesis pending investment if the conditions look right at some time in the future.

Disc: I don’t own, but it’s high up on the watch list.