A $10,000 position in Invesco Semiconductors ETF (NASDAQ:PSI) on the last trading day of 2025 was worth ~$20,496 by the close on May 26, 2026, and that is the kind of arithmetic that ruins dinner parties. Your brother-in-law at Goldman is up 10.07% in the S&P 500. Your friend who only buys the Nasdaq 100 through Invesco QQQ Trust (NASDAQ:QQQ) is up 18.88%. The hedge fund manager at the end of the table, the one who keeps mentioning his Sharpe ratio, is somewhere in between. And the cheapest, most boring sleeve of a semiconductor ETF that almost nobody at those tables holds is up 104.96% in not quite five months.
That is the headline. The mechanism is the more interesting part, and so is the question of whether a reader who shows up to the chart in late May 2026 is buying the same setup or a much more expensive version of it.
The Arithmetic, On A Specific Day, In Plain Dollars PSI opened 2026 at an adjusted price of $78.86 on the December 31, 2025 close. It traded at $161.63 on the May 26, 2026 close, including a 5.13% single-session move on the way there. So $10,000 became ~$20,496, or roughly a double in ~100 trading days. That is total return on an adjusted basis. The figure does not require a cherry-picked entry inside the window, because the window starts on the calendar year boundary. It is the boring, defensible version of the headline.
Stretch the lens out and the picture is louder. PSI is up 217.23% over the trailing year, 298.59% over five years, and 1,793.3% over ten. The Motley Fool ran the numbers in late 2025 and noted that $100 invested ten years ago was worth ~$920 today, an 820% total return versus the S&P 500’s 233%. None of this is leverage. PSI is a plain, unlevered, fully invested basket.
The benchmark comparison is what gives the 2026 number its edge. iShares Semiconductor ETF (NASDAQ:SOXX), the cap-weighted competitor most institutions actually own, is up 89.42% year to date. That is an enormous number on its own. PSI still has ~15 percentage points on it. Against the S&P 500 the gap is closer to 95 percentage points. There are not many active equity funds in the world that are going to print that kind of relative number in 2026, which is the reason the title of the article uses the phrase it uses.
Why PSI And Not One Of The Famous Semi ETFs The mechanism here is mostly one structural choice. PSI equal-weights ~30 semiconductor companies tracked through the Dynamic Semiconductor Intellidex Index. Cap-weighted funds like SOXX and the VanEck Semiconductor ETF lean hard on the largest two or three names, which in practice means a very large slug of the two biggest megacap chip designers does most of the work. PSI carries only 3.86% in NVIDIA, which sounds like a handicap until you notice what 2026 has actually rewarded.
Memory chips and semiconductor capital equipment. Those are the two pockets the equal weight forces you into, and they are the two pockets that PineBridge and others spent the late-2025 outlook season flagging. PineBridge’s 2026 equity piece called out a rebound in memory and continued investments in advanced logic, with wafer fabrication equipment spending expected to rise on the back of those two threads. PSI’s top weights have sat on Micron Technology, Lam Research, and Intel, which is to say, the memory cycle and the “pick and shovel” toolmakers. When those two pockets run, an equal-weight semis ETF outruns a cap-weighted one because the cap-weighted one is mostly concentrated in the single largest GPU designer.
The second piece of the mechanism is the AI capex story finally broadening out from the obvious winners. JPMorgan’s 2026 outlook framed it directly, with tech sectors accounting for 36% of S&P 500 earnings and 56% of the index’s capital spending growth over the last 12 months. That spending is not staying inside the megacap GPU designer. It is flowing to the people who build the memory, the etch tools, the deposition tools, the test equipment, and the specialty foundries. PSI’s TradingView writeup in late April flagged a 182.6% surge from its 52-week low, attributing the run to the AI boom and the domestic chip production push. A Tower Semiconductor holding inside the basket was up 444% on a 12-month basis on the strength of defense radar and supply-chain reshoring work.
So the engine is identifiable. Equal weight plus a sector tailwind that rewards the second and third tier of names more than the megacap. The expense ratio is 0.56%, AUM is ~$1.29 billion, and the beta is 1.58. None of those numbers are unusual for the category. The performance came from holdings.
What A Reader Buying In Late May 2026 Is Actually Buying This is the part the dinner-party victory lap leaves out. PSI rose 13% in the past week and 19.85% in the past month. SOXX rose 14.77% in the past week. Anything moving that fast is pricing in a lot of forward good news before the news lands. Morningstar’s 2026 outlook tracks its Global Next Generation AI Index against fair value and notes the index sits above fair value, having ranged from 74% to 114% of fair value since 2023. An Intellectia AI valuation note from early April put PSI itself in the “fair” zone based on forward P/S ratio versus its 5-year average, with the caveat that the level “seems unsustainable despite strong revenue growth.” That was 47 dollars ago on the chart.
The conditions that produced the run are mostly still in place. Wafer fab equipment spending is still expected to grow. Memory pricing has not rolled. The reshoring story still has years of capex behind it. PineBridge’s view of ~25% annual growth in datacenter equipment for the next four to five years, anchored to electrical infrastructure constraints, is the kind of structural call that has held up across multiple outlook cycles. The setup is intact. It is also a lot more expensive than it was on January 2.
Three indicators are worth watching from here, all of them observable without a Bloomberg terminal. First, the memory pricing tape, because contract DRAM and NAND pricing from the largest US memory maker is what makes the largest single weight in PSI move. Second, the quarterly capex guidance from the hyperscalers and from TSMC, because that capex is the order book for the major wafer fab equipment toolmakers. Third, the Philadelphia Semiconductor Index, which is what SOXX is built around, because if SOXX rolls, PSI is going to roll harder given its higher beta. Vanguard’s 2026 piece flagged that AI investment’s outsized contribution to economic growth represents the key risk factor in 2026, which is a polite way of saying that if AI capex blinks, semis blink first.
The honest read is that PSI’s 2026 was earned, and that the mechanism is identifiable and largely structural. The fund did exactly what it was built to do during a regime that happened to suit it. That is the durable part. The part that will not repeat on the same scale is the starting price. You can still own the mechanism. You cannot still own the entry. Watch memory pricing and watch hyperscaler capex, because that is where the next leg, up or down, is going to show up first.
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Earnings estimates are expectations of growth and profitability, and are determined by brokerage analysts. Together with company management, these analysts examine every aspect that may affect future earnings, like interest rates, the economy, and sector and industry optimism.
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Because stock prices react to revisions, buying stocks with rising earnings estimates can be very profitable. Focus List stocks offer investors a great opportunity to get into companies whose future earnings estimates will be raised, potentially leading to price momentum.
Focus List Spotlight: Lam Research (LRCX - Free Report) Fremont, CA-based Lam Research supplies wafer fabrication equipment and services to the semiconductor industry. It serves the related markets that rely on semiconductor processes and require production-proven manufacturing capabilities, such as complementary metal-oxide-semiconductor image sensors and micro-electromechanical systems (MEMS).
Since being added to the Focus List on December 5, 2016 at $10.05 per share, shares of LRCX have increased 3055.42% to $317.12. The stock is currently a #2 (Buy) on the Zacks Rank.
13 analysts revised their earnings estimate higher in the last 60 days for fiscal 2026, while the Zacks Consensus Estimate has increased $0.39 to $5.67. LRCX also boasts an average earnings surprise of 7.9%.
Additionally, LRCX's earnings are expected to grow 37% for the current fiscal year.
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Key Takeaways Lam Research generated $810M in free cash flow in Q3'26 and repurchased $1.16B of shares.Lam Research Q3 revenues hit a record $5.84B, up 24% y/y, while non-GAAP EPS rose 41.3% to $1.47.LRCX still has $4.75B remaining under the current buyback authorization as it plans to return 85% of FCF. Lam Research Corporation’s (LRCX - Free Report) strong cash generation is providing ample support for its aggressive share repurchase strategy, and the trend could continue as artificial intelligence (AI)-driven semiconductor demand boosts earnings and profitability. The company has consistently returned excess cash to shareholders through share buybacks and dividends while still investing for future growth.
In the third quarter of fiscal 2026, Lam Research generated $1.14 billion in operating cash flow and approximately $810 million in free cash flow. At the same time, the company returned significant capital to shareholders through $1.16 billion of share repurchases and $326 million in dividends. During the first three quarters of fiscal 2026, LRCX generated operating cash flow of $4.40 billion and free cash flow of $3.62 billion while returning $4.55 billion to shareholders through share repurchases and dividend payments.
Lam Research’s earnings strength is helping fund these returns. Revenues reached a record $5.84 billion in the third quarter, up 24% year over year, while non-GAAP earnings per share climbed 41.3% to $1.47. Non-GAAP gross and operating margins improved 90 basis points and 220 basis points, respectively, reflecting a favorable product mix and operational efficiency. LRCX ended the third quarter with $4.75 billion in cash and cash equivalents, providing financial flexibility, even after substantial shareholder returns.
AI remains a major growth driver. Lam Research expects wafer fabrication equipment spending to reach about $140 billion in calendar year 2026, with a possibility of further upside. The company also expects advanced packaging revenues to grow more than 50% this year as AI server deployments accelerate.
With AI fueling revenue growth, gross margin approaching 50%, and cash flows remaining healthy, Lam Research appears well-positioned to continue reducing its share count and enhancing shareholder value through buybacks in the coming quarters. During third-quarter fiscal 2026 results, management reiterated plans to return at least 85% of free cash flow to shareholders over time. At the end of the quarter, it had $4.3 billion remaining under its ongoing share repurchase authorization.
Checking Lam Research’s Rival Shareholder Return PolicyTwo major competitors that closely mirror Lam Research’s capital return strategy are Applied Materials, Inc. (AMAT - Free Report) and KLA Corporation (KLAC - Free Report) . Both companies are benefiting from AI-driven semiconductor spending while generating strong cash flows that support share repurchases.
Applied Materials continues to produce substantial free cash flow through its semiconductor equipment business. The company has regularly returned billions of dollars to shareholders through buybacks and dividends while maintaining investments in advanced packaging, DRAM and foundry technologies.
In the first half of fiscal 2026, Applied Materials generated $2.53 billion in operating cash flow and $1.25 billion in free cash flow while returning $1.47 billion to shareholders through share buybacks and dividend payments. Its broad exposure to AI infrastructure and leading-edge chip manufacturing helps support strong profitability and cash generation.
KLA Corporation is another strong cash flow producer due to its high-margin process control and inspection business. The company consistently converts a large portion of earnings into free cash flow and has an established history of reducing share count through repurchases.
In the trailing 12 months, KLA Corporation generated operating and free cash flows of $4.40 billion and $4.01 billion, respectively. During the same time frame, it returned $3.15 billion to shareholders through share repurchases and dividend payments. Growing demand for advanced process control tools in AI chips, HBM memory and leading-edge manufacturing is supporting its long-term cash-generation profile.
LRCX’s Share Price Performance, Valuation and EstimatesShares of Lam Research have surged 95.3% year to date compared with the Zacks Electronics – Semiconductors industry’s rise of 60%.
Lam Research YTD Price Return Performance
Image Source: Zacks Investment Research
From a valuation standpoint, Lam Research trades at a forward price-to-earnings ratio of 44.09, significantly higher than the industry’s average of 38.83.
Lam Research Forward 12-Month P/E Ratio
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Lam Research’s fiscal 2026 and 2027 earnings implies a year-over-year increase of approximately 37% and 36.4%, respectively. Estimates for fiscal 2026 have been revised downward over the past 30 days, while estimates for fiscal 2027 have been revised upward over the same time frame.
Image Source: Zacks Investment Research
Lam Research currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Lam Research (LRCX - Free Report) closed the most recent trading day at $336.41, moving -2.12% from the previous trading session. This move lagged the S&P 500's daily gain of 0.41%. At the same time, the Dow added 1.73%, and the tech-heavy Nasdaq lost 0.09%.
Shares of the semiconductor equipment maker witnessed a gain of 15.66% over the previous month, beating the performance of the Computer and Technology sector with its gain of 10.03%, and the S&P 500's gain of 4.59%.
The upcoming earnings release of Lam Research will be of great interest to investors. The company is expected to report EPS of $1.65, up 24.06% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $6.64 billion, up 28.42% from the prior-year quarter.
In terms of the entire fiscal year, the Zacks Consensus Estimates predict earnings of $5.67 per share and a revenue of $23.03 billion, indicating changes of +36.96% and +24.95%, respectively, from the former year.
It is also important to note the recent changes to analyst estimates for Lam Research. Such recent modifications usually signify the changing landscape of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the business outlook.
Based on our research, we believe these estimate revisions are directly related to near-term stock moves. To utilize this, we have created the Zacks Rank, a proprietary model that integrates these estimate changes and provides a functional rating system.
The Zacks Rank system, which varies between #1 (Strong Buy) and #5 (Strong Sell), carries an impressive track record of exceeding expectations, confirmed by external audits, with stocks at #1 delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has remained steady. Lam Research is currently sporting a Zacks Rank of #2 (Buy).
In the context of valuation, Lam Research is at present trading with a Forward P/E ratio of 60.59. This signifies a premium in comparison to the average Forward P/E of 51.74 for its industry.
It's also important to note that LRCX currently trades at a PEG ratio of 2.85. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. By the end of yesterday's trading, the Electronics - Semiconductors industry had an average PEG ratio of 2.18.
The Electronics - Semiconductors industry is part of the Computer and Technology sector. At present, this industry carries a Zacks Industry Rank of 50, placing it within the top 21% of over 250 industries.
The Zacks Industry Rank evaluates the power of our distinct industry groups by determining the average Zacks Rank of the individual stocks forming the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.
Make sure to utilize Zacks.com to follow all of these stock-moving metrics, and more, in the coming trading sessions.
Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
Lam Research Corporation is a top-tier player in the high-quality semiconductor equipment industry. I maintain a Buy rating with a 12-month price target of $360–$380, reflecting confidence in LRCX's mid-cycle earnings normalization. LRCX's leadership in etch and deposition equipment and AI-driven chip complexity trends provide structural growth tailwinds.
Lam Research (LRCX - Free Report) closed at $321.80 in the latest trading session, marking a -1.64% move from the prior day. This change lagged the S&P 500's 1.62% loss on the day. At the same time, the Dow lost 1.87%, and the tech-heavy Nasdaq lost 1.98%.
Shares of the semiconductor equipment maker witnessed a gain of 13.11% over the previous month, beating the performance of the Computer and Technology sector with its loss of 0.74%, and the S&P 500's loss of 0.03%.
Analysts and investors alike will be keeping a close eye on the performance of Lam Research in its upcoming earnings disclosure. The company is predicted to post an EPS of $1.65, indicating a 24.06% growth compared to the equivalent quarter last year. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $6.64 billion, up 28.42% from the year-ago period.
Regarding the entire year, the Zacks Consensus Estimates forecast earnings of $5.67 per share and revenue of $23.03 billion, indicating changes of +36.96% and +24.95%, respectively, compared to the previous year.
Investors should also pay attention to any latest changes in analyst estimates for Lam Research. These latest adjustments often mirror the shifting dynamics of short-term business patterns. With this in mind, we can consider positive estimate revisions a sign of optimism about the business outlook.
Empirical research indicates that these revisions in estimates have a direct correlation with impending stock price performance. To take advantage of this, we've established the Zacks Rank, an exclusive model that considers these estimated changes and delivers an operational rating system.
The Zacks Rank system, stretching from #1 (Strong Buy) to #5 (Strong Sell), has a noteworthy track record of outperforming, validated by third-party audits, with stocks rated #1 producing an average annual return of +25% since the year 1988. Over the past month, the Zacks Consensus EPS estimate has remained steady. Lam Research is currently a Zacks Rank #2 (Buy).
With respect to valuation, Lam Research is currently being traded at a Forward P/E ratio of 57.67. This indicates a premium in contrast to its industry's Forward P/E of 48.66.
It is also worth noting that LRCX currently has a PEG ratio of 2.71. The PEG ratio is akin to the commonly utilized P/E ratio, but this measure also incorporates the company's anticipated earnings growth rate. LRCX's industry had an average PEG ratio of 1.94 as of yesterday's close.
The Electronics - Semiconductors industry is part of the Computer and Technology sector. Currently, this industry holds a Zacks Industry Rank of 50, positioning it in the top 21% of all 250+ industries.
The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.
Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.
Lam Research delivered record Q3 FY26 results, with revenue up 23.8% YoY to $5.84B and adjusted EPS up over 40%, beating consensus. LRCX is exceptionally positioned for continued growth, driven by accelerating AI-driven semiconductor demand and continued R&D investment. Despite trading at a premium, the company's superior growth expectations and market leadership in wafer fabrication equipment justify the multiple.
Key Takeaways Lam Research shares have jumped 86.8% YTD, beating the semiconductor industry's 46.3% gain.AI/HPC drives demand for Lam Research etch and deposition tools used in HBM and advanced packaging.LRCX Q3 revenues rose 24% to $5.84B, non-GAAP EPS jumped 41% to $1.47, and operating margin hit 35%. Lam Research Corporation (LRCX - Free Report) has been one of the biggest winners in the semiconductor space this year. The company has been benefiting from the explosive growth of artificial intelligence (AI) and high-performance computing (HPC), which are driving unprecedented demand for its wafer fabrication equipment and services used for chip manufacturing. Shares of Lam Research have surged 86.8% year to date, significantly outperforming the broader Zacks Electronics - Semiconductor industry's gain of 46.3%.
The stock has also delivered stronger returns than several industry peers, including Amkor Technology, Inc. (AMKR - Free Report) , Cirrus Logic, Inc. (CRUS - Free Report) and Broadcom Inc. (AVGO - Free Report) . Year to date, shares of Amkor Technology, Cirrus Logic and Broadcom have soared 75.5%, 33.3% and 7.4%, respectively.
While such a massive rally may make some investors question whether the stock has run too far, Lam Research's strong fundamentals suggest there could still be room for upside. The company remains one of the clearest beneficiaries of the AI infrastructure boom, and demand trends continue to work heavily in its favor.
Lam Research YTD Price Return Performance
Image Source: Zacks Investment Research
AI-Led Demand Boosts LRCX’s Long-Term ProspectsLam Research is capitalizing on AI trends. It builds the tools chipmakers need to manufacture next-generation semiconductors, including high-bandwidth memory (HBM) and chips used in advanced packaging. These technologies are vital for powering AI and cloud data centers.
Lam Research’s products are not only critical but also innovative. For example, its ALTUS ALD tool uses molybdenum to improve speed and efficiency in chip production. Another product, the Aether platform, helps chipmakers achieve higher performance and density. These are essential capabilities as demand for advanced AI chips continues to increase.
In 2025, Lam Research’s revenues from advanced packaging grew significantly, and management anticipates more than 50% year-over-year growth for 2026. The industry’s migration to backside power distribution and dry-resist processing presents growth opportunities for LRCX’s cutting-edge fabrication solutions.
These trends are aiding Lam Research’s financial performance. The company has demonstrated consistent execution, maintaining quarterly revenues of more than $5 billion for the past four consecutive quarters, reflecting solid demand from leading chipmakers such as Taiwan Semiconductor Manufacturing and Samsung.
Lam Research’s Resilient Financial ResultsDespite ongoing macroeconomic challenges, geopolitical issues, and trade and tariff wars, LRCX’s financials remain impressive. In the company’s last reported financial results for the third quarter of fiscal 2026, total revenues rose 24% year over year to $5.84 billion and beat the Zacks Consensus Estimate by 1.3%, primarily driven by continued demand across the Systems and Customer Support Business Group segments.
Lam Research reported third-quarter non-GAAP earnings of $1.47 per share, which topped the consensus mark by 8.1%. The bottom line also increased 41.3% on a year-over-year basis.
Expanding its manufacturing operations in Asia has helped the company lower costs and improve margins. In the third quarter, Lam Research’s non-GAAP operating margin rose to 35%, up 220 basis points from the year-ago quarter, which is impressive, considering the challenging macroeconomic environment.
This strong financial performance reinforces Lam Research’s resilience in navigating an evolving semiconductor cycle. As demand grows for advanced nodes, LRCX’s specialized technology in etch and deposition tools for high-aspect-ratio structures positions it well to capitalize on this trend. The company’s third-quarter results also highlight its effective cost management, which has enabled sustained profitability.
With AI-driven investments accelerating, Lam Research’s leading position in etch and deposition makes it a key beneficiary of the ongoing semiconductor spending cycle. The Zacks Consensus Estimate for fiscal 2026 and 2027 revenues implies a year-over-year increase of 25% and 30.3%, respectively. The consensus mark for fiscal 2026 and 2027 earnings per share indicates growth of 37% and 36.5%, respectively.
Steady Growth Outlook Justifies LRCX’s Premium ValuationValuation-wise, Lam Research is overvalued, as suggested by the Zacks Value Score of F.
In terms of forward 12-month Price/Earnings (P/E), LRCX shares are trading at 42.91X, higher than the sector’s 34.83X. However, we believe that the company’s steady earnings growth and rising AI-linked demand justify the premium valuation.
Lam Research Forward 12-Month P/E Ratio
Image Source: Zacks Investment Research
Compared with major semiconductor equipment providers, LRCX trades at a higher P/E multiple than Amkor Technology, Broadcom and Cirrus Logic. At present, Amkor Technology, Broadcom and Cirrus Logic have forward 12-month P/E multiples of 33.70, 25.14 and 17.07, respectively.
Conclusion: Buy LRCX Stock for NowLam Research’s strong technological foundation and strategic focus on high-growth markets like AI and HPC make it a compelling long-term investment. The company’s innovation and operational efficiency provide a solid foundation for future growth. Considering these factors, accumulating LRCX stock appears to be the most prudent strategy for investors.
Currently, Lam Research carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
After getting knocked around for three days, Wall Street decided it was time to get back up on Thursday morning.
The Dow Jones Industrial Average (^DJI +0.70%) climbed 0.7% by noon, while the S&P 500 (^GSPC +0.50%) added 0.4%. The Nasdaq Composite (^IXIC +0.31%) was up 0.6%, though it had been running as high as 1.3% earlier before losing some steam. A brief scare around 11 a.m., when a false hazmat alarm triggered a Pentagon lockdown, sent all three indexes into a brief dip toward flat for a few minutes. The all-clear came quickly, and so did the buyers.
^DJI data by YCharts
Behind Thursday's modest bounce Semiconductor stocks led the morning rally after entering correction territory earlier this week.
Chip equipment makers posted particularly strong gains, with Lam Research (LRCX +1.19%) up 8.4% and Micron Technology (MU 1.02%) rising 3.6%. Analysts have been raising price targets and talking up AI-driven demand. However, these stocks are too small to make a serious difference to any of the leading indexes today, despite their large jumps.
Likewise, Oracle (ORCL 0.05%) barely made a ripple on the S&P 500 index, and isn't even a member of the Nasdaq and Dow Jones lists. The averages barely noticed the software giant's beat-and-raise report with a $70 billion next-year budget for capital expenses, which sent the stock as much as 12.9% lower in the morning.
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On the other hand, Google parent Alphabet (GOOG +0.45%) (GOOGL +0.53%) is down just 2.2% with no huge news of its own. Yet, it is moving the Nasdaq Composite and S&P 500 indexes more than any other stock today. That's the index-moving power of a $4.2 trillion market cap.
The morning's inflation data didn't help the market mood. The Producer Price Index rose 1.1% in May, hotter than the 0.7% Wall Street expected. Year-over-year, wholesale prices are up 6.5%, the biggest jump in over three years. The culprit is mostly energy, as oil-related costs accounted for about 80% of the increase.
Meanwhile, the U.S.-Iran situation remains fluid. President Trump threatened further military action overnight, and Iran claimed it had closed the Strait of Hormuz. U.S. officials dispute that, and reports suggest diplomatic back channels are still active. It's hard to tell what's going on behind the scenes in and around Iran. Oil prices reflected the uncertainty, with West Texas Intermediate up by 0.5%.
Image source: Getty Images.
Looking ahead Thursday's session reflects a market caught between competing forces. Investors are bargain-hunting in semiconductors after a 10% correction, but sticky inflation and geopolitical risk are capping the enthusiasm. The iShares Bitcoin Trust ETF (IBIT 0.03%) rose 1.2%, reverting to Bitcoin's (BTC +0.43%) long-running pattern of rising alongside volatile equities rather than acting as a traditional safe haven.
All eyes now turn to the Friday session, when SpaceX (expected ticker: SPCX) is expected to debut on public markets at a valuation near $1.75 trillion. Some analysts believe this week's tech weakness partly reflects investors selling existing positions to make room for the largest stock offering ever.
For investors with a longer time horizon, the lesson is familiar: one green day doesn't erase the questions that caused the red ones. Inflation, interest rates, and geopolitics haven't gone anywhere. They're just taking a breather. Time will tell how long the uptick lasts.
Anders Bylund has positions in Alphabet, Bitcoin, Micron Technology, and iShares Bitcoin Trust. The Motley Fool has positions in and recommends Alphabet, Bitcoin, Lam Research, Micron Technology, Oracle, and iShares Bitcoin Trust. The Motley Fool has a disclosure policy.
Key Takeaways CSX Q1 EPS beat estimates at 43 cents, rising 26% YoY, while revenue missed despite 2% growth.CSX saw gains from pricing, intermodal growth, and lower costs, lifting operating margin to 36%.CSX raised its 2026 outlook with higher revenue growth, margin expansion, and over 60% free cash flow growth. CSX Corporation (CSX - Free Report) reported mixed first-quarter 2026 results wherein earnings surpassed the Zacks Consensus Estimate while revenues missed the mark.
Quarterly earnings per share of 43 cents surpassed the Zacks Consensus Estimate of 39 cents and increased 26% on a year-over-year basis. Results were aided by revenue growth and a reduction in operating expenses.
Total revenues of $3.48 billion missed the Zacks Consensus Estimate of $3.51 billion. The top line increased 2% year over year on the back of higher merchandise pricing, intermodal volume growth, higher domestic coal revenue and increased fuel surcharge revenue. These were partially offset by a decrease in export coal revenue, including the impact of lower benchmark rates.
First-quarter operating income increased 20% year over year to $1.25 billion. Total expenses decreased 6% year over year. CSX’s operating margin during the March quarter rose to 36% from 30.4% in the year-ago quarter. Total volumes inched up 3% year over year, boosted by intermodal volumes.
Q1 Segmental Performance of CSXMerchandise revenues grew 2% year over year to $2.18 billion (matched with our estimate figure) in the reported quarter. Merchandise volumes rose marginally to $631 million. Segmental revenue per unit inched up 2% year over year.
Intermodal revenues increased 5% year over year to $518 million (below our estimate of $551.5 million). Segmental volumes increased 6% while revenue per unit was down 1% year over year.
Coal revenues slid 1% year over year to $458 million in the reported quarter. Coal volumes inched down 1% year over year, while segmental revenue per unit fell marginally.
Trucking revenues totaled $202 million (above our estimate of $183.4 million), flat year over year. Other revenues rose 1% year over year to $116 million in the reported quarter.
CSX’s LiquidityCSX exited the first quarter of 2026 with cash and cash equivalents of $964 million compared with $670 million at the end of the prior quarter. Long-term debt of $18.2 billion was flat sequentially.
CSX's 2026 Guidance For 2026, CSX now expects mid-single digit revenue growth (including fuel, based on the current forward curve for diesel) compared with the prior guidance of low single-digit revenue growth.
Operating margin expansion is now anticipated toward the higher end of the 200-300 basis point range, while previously it was expected to be around 200-300 basis points.
Free Cash flow is now anticipated to increase more than 60% compared with the prior expectation of growth of at least 50%.
CSX continues to expect capital expenditures to be below $2.4 billion.
Currently, CSX carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Q1 Performances of Other Transportation CompaniesDelta Air Lines (DAL - Free Report) reported first-quarter 2026 earnings (excluding $1.08 from non-recurring items) of 64 cents per share, which beat the Zacks Consensus Estimate of 61 cents. Earnings increased 39.1% on a year-over-year basis due to high labor costs. Adjusted revenues in the March-end quarter were $14.2 billion, beating the Zacks Consensus Estimate of $14 billion and increasing on a year-over-year basis.
United Airlines Holdings, Inc. (UAL - Free Report) reported solid first-quarter 2026 results wherein the company’s earnings and revenues beat the Zacks Consensus Estimate as well as improved on a year-over-year basis.
UAL's first-quarter 2026 adjusted earnings per share (EPS) (excluding 95 cents from non-recurring items) of $1.19 surpassed the Zacks Consensus Estimate of $1.08 and increased 30.8% on a year-over-year basis. The reported figure lies within the guided range of $1.00-$1.50.
Operating revenues of $14.6 billion outpaced the Zacks Consensus Estimate of $14.3 billion and increased 10.5% year over year. Passenger revenues (which accounted for 90.1% of the top line) increased 11% year over year to $13.1 billion. UAL flights transported 42,486 passengers in the first quarter, up 4.1% year over year.
Cargo revenues fell 1.6% year over year to $422 million. Revenues from other sources rose 10.5% year over year to $1.02 billion.
J.B. Hunt Transport Services (JBHT - Free Report) posted first-quarter 2026 earnings per share of $1.49, up 27% from $1.17 a year ago. The result topped the Zacks Consensus Estimate by $0.04, a 2.8% surprise.
Operating revenues totaled $3.06 billion, rising 4.6% year over year. Revenues beat the consensus mark of $2.94 billion, resulting in a 3.9% surprise, as demand proved resilient across several service offerings, led by Intermodal volume growth and higher revenue per load in select highway-related businesses.
On April 28, 2026, we delve into the DCF analysis for CSX Corp CSX , a company that has demonstrated impressive price performance recently, with a year-to-date increase of 25.8% and a remarkable 65.8% rise over the past year. Below are some key highlights:
DCF Earnings-based intrinsic value of $30.68 compared to the current price of $45.46 (margin of safety: -48.2%) DCF FCF-based intrinsic value of $26.64 compared to the current price (second opinion: -70.7% margin of safety) GF Score™ of 88/100, indicating a high reliability of the DCF inputs What Is CSX Worth? DCF Earnings-Based Model The DCF earnings-based model employs a two-stage approach to estimate the intrinsic value of CSX. In the first stage, we project earnings growth over the next 10 years, followed by a terminal growth phase. The assumptions used in this model are outlined in the table below:
Parameter Value Current EPS (TTM, excl. non-recurring) $1.70 10-Year Growth Rate 11.8% 10-Year Treasury Rate 4.35% Discount Rate (ceil(Treasury) + 6%) 11% Terminal Growth Rate 4% In the first stage (Years 1-10), we expect EPS to grow at an annual rate of 11.8%, which is then discounted at a rate of 11%. In the second stage (Years 11-20), growth slows to a terminal rate of 4%, also discounted at 11%. The summary of our calculations is presented in the table below:
Stage Description Value Growth Stage (Years 1-10) EPS growing at 11.8%, discounted at 11% $17.69 Terminal Stage (Years 11-20) 4% terminal growth, discounted at 11% $12.99 Intrinsic Value Growth + Terminal $30.68 When comparing the current price of CSX at $45.46 to the intrinsic value of $30.68, we find that the stock is modestly overvalued, with a margin of safety of -48.2%. It is important to note that GuruFocus uses EPS excluding non-recurring items, as research indicates that stock prices correlate more closely with earnings than with free cash flow. For further details, visit the CSX DCF Calculator.
What Does the Free Cash Flow DCF Say? The free cash flow (FCF)-based intrinsic value for CSX is calculated to be $26.64. When we compare this with the earnings-based intrinsic value of $30.68, we observe a consensus that both models suggest the stock is modestly overvalued, with a significant margin of safety of -70.7% for the FCF model.
How Does GF Value™ Compare to the DCF Models? The GF Value™ of CSX is calculated at $34.99, providing a third perspective on the valuation. GF Value™ is GuruFocus' proprietary measure derived from historical trading multiples, past business growth, and future performance estimates. When we analyze the three models—DCF earnings, DCF FCF, and GF Value™—we find that they all indicate that CSX is currently overvalued. For more information, visit the GF Value™ page.
What Does CSX's GF Score™ Tell Us? The GF Score™ ranks stocks from 0 to 100 based on five key aspects: Financial Strength, Profitability, Growth, Valuation, and Momentum. Stocks with higher GF Score™ values have historically generated higher long-term returns (backtested from 2006 to 2021). The table below summarizes CSX's GF Score™ metrics:
Metric Rating GF Score™ 88/100 Financial Strength 4/10 Profitability 9/10 Growth 8/10 Valuation 5/10 Momentum 10/10 CSX has a predictability rating of 1 out of 5 stars, indicating that the DCF model may be less reliable for this stock. For more details, visit the CSX stock page.
Key Assumptions and Limitations It is important to note that DCF models are highly sensitive to the assumptions made regarding growth rates and discount rates. Stocks with low predictability ratings, such as CSX, tend to produce less reliable DCF estimates. Additionally, the terminal growth rate of 4% is a simplifying assumption that may not reflect future economic conditions accurately.
What This Means for Investors In summary, the three valuation models—DCF earnings, DCF FCF, and GF Value™—all suggest that CSX is currently overvalued. The intrinsic values derived from both DCF models are significantly lower than the current market price, reinforcing the notion of overvaluation.
For the full DCF analysis, visit the CSX DCF Calculator. You can also explore the GF Value™ page, or use the GuruFocus Stock Screener to find undervalued predictable companies.
Frequently Asked Questions What is CSX's intrinsic value based on DCF?
Answer: earnings-based $30.68, FCF-based $26.64
Is CSX overvalued or undervalued?
Answer: Based on the consensus of DCF and GF Value™, CSX is overvalued.
How reliable is the DCF model for CSX?
Answer: The predictability rank of 1/5 indicates lower reliability for the DCF model for CSX.
This stock alert was generated using automated technology and GuruFocus financial data to provide readers with timely and accurate market reporting. This content was reviewed by GuruFocus editorial team prior to publication. Please send any questions or comments about this story to [email protected].
JACKSONVILLE, Fla., May 04, 2026 (GLOBE NEWSWIRE) -- CSX Corp. (NASDAQ: CSX) today launched a public resource at www.csxstayingontrack.com to support shippers, communities, and other stakeholders interested in engaging with the Surface Transportation Board’s review of the refiled merger application between Union Pacific (UP) and Norfolk Southern (NS). The site provides information on the STB review process, links to the public docket, guidance on filing comments on the record with the STB, and options for providing feedback to the Department of Justice (DOJ) on a confidential basis.
Today’s U.S. Class I freight rail system is competitively balanced, consisting of six carriers: two western railroads, two eastern railroads, and two Canadian carriers providing north-south service. This industry structure has supported routing options and competitive choices for rail shippers. The proposed combination would create a single transcontinental carrier alongside four regional carriers, resulting in an industry imbalance that would reduce viable options for shippers. These are among the matters the STB will consider to determine whether the proposed transaction is in the public interest and enhances competition.
“Our customers depend on a competitive and healthy freight rail system. Customers and the communities we serve have a stake in this review, and we are here to help them be heard,” said Steve Angel, Chief Executive Officer of CSX.
About CSX
CSX, based in Jacksonville, Florida, is a premier transportation company. It provides rail, intermodal and rail-to-truck transload services and solutions to customers across a broad array of markets, including energy, industrial, construction, agricultural and consumer products. For nearly 200 years, CSX has played a critical role in the nation’s economic expansion and industrial development. Its network connects every major metropolitan area in the eastern United States, where nearly two-thirds of the nation’s population resides. It also links more than 240 short-line railroads and more than 70 ocean, river and lake ports with major population centers and farming towns alike. More information about CSX Corporation and its subsidiaries is available at www.csx.com. Like us on Facebook and follow us on X, formerly known as Twitter.
Contact:
Matthew Korn, CFA, Investor Relations
904-366-4515
JACKSONVILLE, Fla., May 05, 2026 (GLOBE NEWSWIRE) -- CSX Corp. (NASDAQ: CSX) Executive Vice President and Chief Financial Officer, Kevin Boone, will address the Bank of America 33rd Annual Industrials, Transportation & Airlines Key Leaders Conference in New York on Wednesday, May 13, at 8:45 a.m.
On May 08, 2026, we present a DCF analysis for CSX Corp CSX , a company that has shown a remarkable price performance with a year-to-date increase of 23.1% and a one-year gain of 55.9%. However, despite this strong performance, our analysis indicates that CSX may be overvalued based on intrinsic value calculations. Here are some key points:
DCF Earnings-based intrinsic value of $30.68 vs current price of $44.46 (margin of safety: -44.9%) DCF FCF-based intrinsic value of $26.64 vs current price (second opinion indicates a larger margin of safety: -66.9%) GF Score™ of 86/100 suggests a strong reliability of the DCF inputs What Is CSX Worth? DCF Earnings-Based Model To determine the intrinsic value of CSX, we utilized a two-stage DCF model. The first stage accounts for high growth in earnings over the next 10 years, while the second stage reflects a more stable growth rate thereafter. Below are the assumptions used in our analysis:
Parameter Value Current EPS (TTM, excl. non-recurring) $1.70 10-Year Growth Rate 11.8% 10-Year Treasury Rate 4.33% Discount Rate (ceil(Treasury) + 6%) 11% Terminal Growth Rate 4% In the first stage, we project that EPS will grow at a rate of 11.8% per year for the next 10 years, which is then discounted at a rate of 11%. The value derived from this growth stage is $17.69 per share. In the second stage, we assume a terminal growth rate of 4% for the following 10 years, which results in a terminal stage value of $12.99 per share. The summary of our calculations is as follows:
Stage Description Value Growth Stage (Years 1-10) EPS growing at 11.8%, discounted at 11% $17.69 Terminal Stage (Years 11-20) 4% terminal growth, discounted at 11% $12.99 Intrinsic Value Growth + Terminal $30.68 With the current price at $44.46, the intrinsic value of $30.68 indicates that CSX is modestly overvalued, with a margin of safety of -44.9%. It is important to note that GuruFocus uses EPS excluding non-recurring items, as research shows stock prices correlate more closely with earnings than with free cash flow. For further calculations, you can visit the CSX DCF Calculator.
What Does the Free Cash Flow DCF Say? In addition to the earnings-based model, we also evaluated CSX using a Free Cash Flow (FCF) DCF model, which yielded an intrinsic value of $26.64 per share. This FCF-based valuation is lower than the earnings-based valuation, indicating a larger margin of safety of -66.9%. Both models suggest that CSX is modestly overvalued, reinforcing the findings from our earnings-based analysis.
How Does GF Value™ Compare to the DCF Models? The GF Value™ for CSX is calculated at $35.09, providing a third perspective on the valuation. This proprietary measure from GuruFocus is derived from historical trading multiples, past business growth, and future performance estimates. All three models—DCF earnings, DCF FCF, and GF Value™—indicate that CSX is overvalued, suggesting caution for potential investors. For more information, visit the GF Value™ page.
What Does CSX's GF Score™ Tell Us? The GF Score™ ranks stocks from 0 to 100 based on five key aspects: Financial Strength, Profitability, Growth, Valuation, and Momentum. Stocks with higher GF Score™ values have been found to generate higher long-term returns (backtested from 2006 to 2021). Below is a summary of CSX's GF Score™:
Metric Rating GF Score™ 86/100 Financial Strength 4/10 Profitability 9/10 Growth 7/10 Valuation 5/10 Momentum 10/10 CSX has a predictability rank of 1 out of 5 stars, indicating that the DCF model may be less reliable for this stock. For more details, visit the CSX stock page.
Key Assumptions and Limitations It is important to note that DCF models are highly sensitive to the assumptions made regarding growth rates and discount rates. Stocks with low predictability ratings, such as CSX, tend to produce less reliable DCF estimates. The terminal growth rate of 4% used in our analysis is a simplifying assumption that may not accurately reflect future conditions.
What This Means for Investors In summary, our analysis of CSX Corp using the DCF earnings model, DCF FCF model, and GF Value™ indicates that the stock is overvalued. The intrinsic values derived from both DCF models are significantly lower than the current market price, suggesting that investors should exercise caution. For the full DCF analysis, visit the CSX DCF Calculator. You can also explore the GF Value™ page, or use the GuruFocus Stock Screener to find undervalued predictable companies.
Frequently Asked Questions What is CSX's intrinsic value based on DCF?
[Answer: earnings-based $30.68, FCF-based $26.64]
Is CSX overvalued or undervalued?
[Answer using DCF + GF Value™ consensus]
How reliable is the DCF model for CSX?
[Answer using predictability rank 1/5]
This stock alert was generated using automated technology and GuruFocus financial data to provide readers with timely and accurate market reporting. This content was reviewed by GuruFocus editorial team prior to publication. Please send any questions or comments about this story to [email protected].
On May 12, 2026, we conduct a DCF analysis for CSX Corp CSX , a company that has seen a notable price performance with a year-to-date increase of 24.1% and a remarkable 57.2% rise over the past year. However, despite this strong performance, our analysis indicates potential overvaluation.
DCF Earnings-based intrinsic value of $30.68 vs current price of $44.74 (margin of safety: -45.8%) DCF FCF-based intrinsic value of $26.64 vs current price (second opinion indicates overvaluation) GF Score™ of 88/100 suggests high reliability of the DCF inputs What Is CSX Worth? DCF Earnings-Based Model The DCF earnings-based model for CSX Corp utilizes a two-stage growth approach. In the first stage, we project earnings growth over the next 10 years at a rate of 11.8%, followed by a terminal growth rate of 4% for the subsequent 10 years. The discount rate applied is 11%, which accounts for the risk-free rate and equity risk premium.
Parameter Value Current EPS (TTM, excl. non-recurring) $1.70 10-Year Growth Rate 11.8% 10-Year Treasury Rate 4.33% Discount Rate (ceil(Treasury) + 6%) 11% Terminal Growth Rate 4% The calculation summary for the DCF earnings-based model is as follows:
Stage Description Value Growth Stage (Years 1-10) EPS growing at 11.8%, discounted at 11% $17.69 Terminal Stage (Years 11-20) 4% terminal growth, discounted at 11% $12.99 Intrinsic Value Growth + Terminal $30.68 With a current price of $44.74 compared to an intrinsic value of $30.68, CSX appears modestly overvalued, reflecting a margin of safety of -45.8%. It is important to note that GuruFocus uses EPS excluding non-recurring items because research indicates that stock prices correlate more closely with earnings than free cash flow. For further calculations, you can visit the CSX DCF Calculator.
What Does the Free Cash Flow DCF Say? The free cash flow (FCF)-based intrinsic value for CSX is calculated at $26.64. When comparing this with the earnings-based intrinsic value of $30.68, both models indicate a similar conclusion regarding overvaluation, with the FCF model reflecting a margin of safety of -67.9%.
How Does GF Value™ Compare to the DCF Models? The GF Value™ of CSX is calculated at $35.11, providing a third perspective on valuation. GF Value™ is GuruFocus' proprietary measure derived from historical trading multiples, past business growth, and future performance estimates. All three models—DCF earnings, DCF FCF, and GF Value™—indicate that CSX is modestly overvalued at its current price. For more insights, visit the GF Value™ page.
What Does CSX's GF Score™ Tell Us? The GF Score™ ranks stocks from 0 to 100 based on five key aspects: Financial Strength, Profitability, Growth, Valuation, and Momentum. Stocks with higher GF Score™ values have been shown to generate higher long-term returns based on backtested data from 2006 to 2021.
Metric Rating GF Score™ 88/100 Financial Strength 4/10 Profitability 9/10 Growth 8/10 Valuation 5/10 Momentum 10/10 With a predictability rank of 1/5 stars, it indicates that the DCF model may be less reliable for this stock. For more details, visit the CSX stock page.
Key Assumptions and Limitations It is essential to recognize that DCF models are highly sensitive to the assumptions made regarding growth rates and discount rates. Additionally, stocks with low predictability ratings, such as CSX, tend to produce less reliable DCF estimates. The terminal growth rate of 4% used in this analysis is a simplifying assumption that may not accurately reflect future market conditions.
What This Means for Investors In synthesizing the findings from the DCF earnings model, the DCF FCF model, and the GF Value™, it is clear that CSX is currently overvalued based on the intrinsic values derived from these analyses. Investors should consider these insights when making decisions regarding CSX.
For the full DCF analysis, visit the CSX DCF Calculator. You can also explore the GF Value™ page, or use the GuruFocus Stock Screener to find undervalued predictable companies.
Frequently Asked Questions What is CSX's intrinsic value based on DCF?
[Answer: earnings-based $30.68, FCF-based $26.64]
Is CSX overvalued or undervalued?
[Answer using DCF + GF Value™ consensus]
How reliable is the DCF model for CSX?
[Answer using predictability rank 1/5]
This stock alert was generated using automated technology and GuruFocus financial data to provide readers with timely and accurate market reporting. This content was reviewed by GuruFocus editorial team prior to publication. Please send any questions or comments about this story to [email protected].
JACKSONVILLE, Fla., May 12, 2026 (GLOBE NEWSWIRE) -- CSX Corp. (NASDAQ: CSX) announced that the Company’s Board of Directors approved a $0.14 per share quarterly dividend on the Company’s common stock. The dividend is payable June 15, 2026, to shareholders of record at the close of business May 29, 2026.
About CSX and its Disclosures
CSX, based in Jacksonville, Florida, is a premier transportation company. It provides rail, intermodal and rail-to-truck transload services and solutions to customers across a broad array of markets, including energy, industrial, construction, agricultural, and consumer products. For nearly 200 years, CSX has played a critical role in the nation's economic expansion and industrial development. Its network connects every major metropolitan area in the eastern United States, where nearly two-thirds of the nation's population resides. It also links more than 240 short-line railroads and more than 70 ocean, river and lake ports with major population centers and farming towns alike.
This announcement, as well as additional financial information, is available on the Company's website at investors.csx.com. CSX also uses social media channels to communicate information about the company. Although social media channels are not intended to be the primary method of disclosure for material information, it is possible that certain information CSX posts on social media could be deemed to be material. Therefore, we encourage investors, the media, and others interested in the company to review the information we post on Facebook and on X, formerly known as Twitter. The social media channels used by CSX may be updated from time to time. More information about CSX Corporation and its subsidiaries is available at www.csx.com.
Contact:
Matthew Korn, CFA, Investor Relations and Corporate Communications
904-366-4515
The Zacks Transportation - Rail industry faces challenges, ranging from tariff-induced economic uncertainties, inflationary pressures and resultant high interest rates to concerns pertaining to supply-chain disruptions. High fuel costs, due to the ongoing conflict in the Middle East, have been hurting the bottom-line growth of industry players.
Despite the challenges surrounding the industry, Union Pacific Corporation (UNP - Free Report) , CSX Corporation (CSX - Free Report) and Canadian Pacific Kansas City Limited (CP - Free Report) appear better placed to tide over the challenges. Declining fuel costs represent a tailwind as far as bottom-line growth is concerned.
Industry Description The Zacks Transportation - Rail industry includes railroad operators transporting freight (such as agricultural products, industrial products, coal, intermodal, automotive, consumer products, metals and minerals), primarily across North America. These companies focus on providing logistics and supply-chain expertise services. While freight constitutes a significant chunk of revenues, some of these companies also derive a small portion of their top line from other rail-related services, including third-party railcar and locomotive repairs, routine land sales and container sales, among others. A few companies offer services to multiple production and distribution facilities. Besides locomotives, some of these companies own equipment of leased locomotives, railcars, etc.
Factors Deciding the Industry's Outlook Strong Financial Returns for Shareholders:With economic activities gaining pace from the pandemic lows, more and more companies are allocating their increasing cash pile through dividends and buybacks to pacify long-suffering shareholders. This underlines their financial strength and confidence in the business. Among the Transportation – Railroad industry players, CSX's board of directorsapproved a dividend hike of 7.6%, thereby raising its quarterly cash dividend to 14 cents per share (56 cents annualized) from 13 cents (52 cents annualized) in February 2026.
Surge in Fuel Costs: A Bane: The ongoing conflict in the Middle East has resulted in a sharp jump in oil prices. Notably, oil prices surged almost 75% from the beginning of 2026 to date. As fuel expenses represent a key input cost for any transportation player, a rise in oil prices does not bode well for the bottom-line growth of railroad stocks.
Economic Uncertainty Remains: Tariff tensions have led to escalated trade woes across the globe. These tariff-induced economic uncertainties do not bode well for industry participants. With inflation remaining a concern, risks associated with an economic slowdown and geopolitical tensions dampen the prospects of stocks belonging to this industrial cohort. Sluggish economic growth and inflationary woes are likely to make markets more volatile in the coming days. Ongoing economic uncertainty does not bode well for industry players. Tariff-induced economic uncertainties and trade tensions may create uncertainty for investors interested in the industry.
Zacks Industry Rank Indicates Gloomy Prospects The Zacks Transportation Railroad industry, housed within the broader Zacks Transportation sector, currently carries a Zacks Industry Rank #198. This rank places it in the bottom 19% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates dull near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
The sell-side analysts covering the companies in this industry have been decreasing their estimates. Over the past year, the industry’s consensus earnings estimate for the current year has decreased 5.2%.
Before we present a few stocks that investors can retain, given their growth prospects, let’s take a look at the industry’s recent stock market performance and current valuation.
Industry Lags S&P 500, Outperforms Sector The Zacks Transportation - Rail industry has underperformed the Zacks S&P 500 Composite while outperformed the broader sector over the past year.
Over this period, the industry has gained 18.6% compared with the S&P 500 Index’s northward movement of 30.1%. The broader sector has surged 14.8%.
One-Year Price Performance
Industry's Current Valuation Based on the trailing 12-month price-to-book (P/B), a commonly used multiple for valuing railroad stocks, the industry is currently trading at 6.78X compared with the S&P 500’s 7.89X. It is above the sector’s P/B ratio of 4.05X.
Over the past five years, the industry has traded as high as 10.92X, as low as 5.40X and at the median of 6.93X.
3 Stocks to Keep an Eye On We are presenting three Zacks Rank #3 (Hold) stocks that are well-positioned to grow in the near term. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Union Pacific: Headquartered in Omaha, NE, Union Pacific, through its subsidiary, Union Pacific Railroad Company, operates in the railroad business in the United States.
Relatively stable e-commerce demand, cost-cutting efforts to boost the bottom line and consistent initiatives to reward its shareholders through dividend payments and share repurchases bode well for UNP’s prospects. Further, UNP has a solid track record with respect to earnings surprises. The company surpassed the Zacks Consensus Estimate in three of the past four quarters (missed the mark in the remaining quarter), with an average beat of 2.32%. The Zacks Consensus Estimate for UNP’s 2026 earnings has moved up 0.8% over the past 60 days. UNP’s expected earnings growth rate for 2026 is 7.55%.
Price and Consensus: UNP
CSX: Based in Jacksonville, FL, CSX offers rail-based freight transportation services like traditional rail service, transport of intermodal containers and trailers and rail-to-truck transfers.
CSX's consistent efforts to continue rewarding its shareholders by paying dividends and buying back shares look appreciative. The company's focus onimproving workplace safety for employees is commendable. For 2026, CSX now expects mid-single digit revenue growth (including fuel, based on the current forward curve for diesel) compared with the prior guidance of low single-digit revenue growth. Operating margin expansion is now anticipated toward the higher end of the 200-300 basis point (bps) range, while previously it was expected to be around 200-300 bps. Free Cash flow is now anticipated to increase more than 60% compared with the prior expectation of growth of at least 50%.
CSX has a solid earnings surprise history. The company surpassed the Zacks Consensus Estimate in three of the past four quarters (missed the mark in the remaining quarter), with an average beat of 3.16%. The Zacks Consensus Estimate for CSX's 2026 earnings has moved up 2.2% over the past 60 days. CSX has an expected earnings growth rate of 17.39% for 2026.
Price and Consensus: CSX
Canadian Pacific: Headquartered in Calgary, Canada, Canadian Pacific manages a transcontinental freight railway in Canada, the United States and Mexico.
We are encouraged by the Canadian Pacific’s decision to pay dividends consistently. Such a move instills investors’ confidence and positively impacts the company’s bottom line. Canadian Pacific has an encouraging track record with respect to earnings surprise. The company's earnings missed the Zacks Consensus Estimate in each of the past four quarters, delivering an average miss of 2.26%. CP’s expected earnings growth rate for 2026 is 13.94%.
Canadian Pacific expects 2026 core adjusted earnings per share to grow in the low double-digits from the 2025 actuals to C$4.61 per share. The company expects 2026 revenue ton miles to increase in the mid-single digits from the 2025 actuals.
MarketBeat Week in Review – 08/18 - 08/22CSX NASDAQ: CSX used its 2026 annual meeting of shareholders to highlight early-year operating momentum after what executives described as a difficult 2025 marked by weather disruption, major infrastructure work and softer freight conditions.
Chairman John J. Zillmer opened the virtual meeting by thanking CSX railroaders for their work during a year that included severe weather disruptions and the simultaneous execution of two major infrastructure projects that constrained the network. Zillmer said those efforts helped the company recover service performance, improve safety and continue moving essential goods across a network serving major population centers in 26 states east of the Mississippi River, the District of Columbia and parts of Canada.
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This Railroad Stock Is Chugging Along to a New All-Time HighPresident and Chief Executive Officer Steve Angel said the company’s performance improved in the first quarter of 2026, with revenue rising 2% on 3% volume growth. Operating expense fell 6%, operating income increased 20% and earnings per share rose 26%, he said. Angel also cited a 13% improvement in the Federal Railroad Administration injury rate, a more than 30% improvement in the train accident rate and record first-quarter fuel efficiency.
“We are still early in the process, and there is a great deal of work ahead of us to make CSX a best-in-class railroad, but I would say this is an encouraging first step,” Angel said.
2025 Results Fell Short of Expectations Golden Cross Alert: 3 Stocks With Serious Upside PotentialAngel said 2025 was challenging for CSX due to severe weather, the simultaneous execution of two large-scale infrastructure projects, a soft freight environment and unplanned customer closures. Revenue declined 3% on flat volume, while operating margin contracted 400 basis points. Adjusted operating margin contracted 360 basis points. Earnings per diluted share and adjusted earnings per diluted share were $1.54 and $1.61, respectively.
“These results fell short of our expectations,” Angel said.
Despite the weaker financial results, Angel said CSX completed several projects that positioned the railroad for improved performance. He pointed to the reopening of Baltimore’s Howard Street Tunnel after 233 consecutive days of around-the-clock work. The more than $450 million expansion of the 130-year-old tunnel clears what Angel called a century-old bottleneck on the I-95 corridor and enables double-stack intermodal service through Baltimore for the first time.
Angel also highlighted the rebuilding of 60 miles of the Blue Ridge Subdivision destroyed by Hurricane Helene’s flooding. He said full service was restored in under a year after 570,000 man-hours of work, 1 billion cubic yards of rock and 35,500 linear feet of new track through the Nolichucky River Gorge.
Combined with completion of the 75th Street CREATE flyover in Chicago, Angel said the projects add capacity and position CSX to benefit as demand strengthens.
CEO Outlines Priorities for 2026 Angel said CSX is focused on productivity, capital discipline, commercial growth and talent development. He said the company is using artificial intelligence and predictive analytics to improve planning, asset utilization, maintenance, network flow and capital spending decisions.
“Every project will stand on its own,” Angel said, while noting that investments in infrastructure to ensure safe and reliable service will remain the top priority in capital spending.
On the commercial side, Angel said CSX added 85 new or expanded rail-served facilities in 2025 and has approximately 600 customer-related development projects in various stages of engagement. He said the company also expanded its competitive reach through new intermodal and interchange agreements with partner railroads.
CSX returned $2.4 billion to shareholders in 2025 through dividends and share repurchases, Angel said. The company also increased its dividend by 8%, which he said reflected confidence in future cash flow generation.
Howard Street Tunnel, AI and Industrial Development Discussed in Q&A During the question-and-answer session, Angel said the Howard Street Tunnel reopened last fall to single-stack traffic, and the first double-stack train moved through earlier this month. He said filling the added capacity from the project will occur throughout this year and into next year.
Angel said customers are enthusiastic about faster service CSX can provide with BNSF Railway from the West Coast through Atlanta and into the Northeast.
Asked about artificial intelligence, Angel said AI is becoming integrated across the company. In operations, he said AI is being used to analyze large volumes of data to improve planning, asset utilization and network flow. Predictive models are intended to anticipate issues earlier, while machine learning supports predictive condition-based maintenance. On the commercial side, Angel said AI-assisted pricing tools are reducing manual work and speeding up contract negotiations.
Angel also said CSX’s industrial development program is expected to contribute to volume growth. He cited demand for rail-served sites, interest in supply chain resiliency and growth in rail-enabled industries, including automotive, cement, waste and aggregates. Looking to 2027 and 2028, Angel said the initiative is on track to contribute 1% or more to annual volume growth.
CSX Reiterates Opposition to UP-NS Merger Angel was also asked about CSX’s position on the proposed Union Pacific-Norfolk Southern merger. He said CSX issued a press release and launched a website on May 4 outlining its position and providing resources for shippers and other stakeholders.
Angel said CSX reviewed the refiled application and believes it does not meet the new merger rule standards of being in the public interest and enhancing competition. He said the current U.S. Class I railroad structure, with two eastern, two western and two Canadian railroads running north-south, has supported routing options and competitive choices for shippers.
“The proposed combination would create a single transcontinental carrier versus four regional carriers, and the resulting imbalance, in our view, would reduce viable options for shippers,” Angel said.
Shareholders Approve Board, Auditor and Executive Pay Proposal Michael Burns, CSX’s senior vice president, chief legal officer and corporate secretary, said preliminary voting results showed that all 12 nominees to the board of directors were elected. Shareholders also ratified Ernst & Young as the company’s independent registered public accounting firm for 2026 and approved the advisory, non-binding resolution on compensation for CSX’s named executive officers.
Final vote totals will be reported in a Form 8-K filing with the Securities and Exchange Commission within four business days following the meeting, Burns said.
About CSX NASDAQ: CSXCSX Corporation is a leading North American transportation company that provides rail-based freight services and supply-chain solutions. Its operating subsidiary, CSX Transportation, moves a wide range of goods for customers across multiple industries, using a combination of long-haul rail service, intermodal operations and terminal and yard services. The company focuses on delivering efficient, reliable freight transportation between major production centers, consumption markets and port gateways.
CSX's freight portfolio includes intermodal containers and trailers, bulk commodities, industrial products and specialized unit trains.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected].
Should You Invest $1,000 in CSX Right Now?Before you consider CSX, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and CSX wasn't on the list.
While CSX currently has a Moderate Buy rating among analysts, top-rated analysts believe these five stocks are better buys.
View The Five Stocks Here
Discover the next wave of investment opportunities with our report, 7 Stocks That Will Be Magnificent in 2026. Explore companies poised to replicate the growth, innovation, and value creation of the tech giants dominating today's markets.
MarketBeat Week in Review – 08/18 - 08/22CSX NASDAQ: CSX Executive Vice President and Chief Financial Officer Kevin Boone said the railroad remains focused on improving margins, capturing pricing tied to better service and using capital more efficiently, while cautioning that “one quarter doesn’t make a year.”
Speaking at an investor conference, Boone said CSX entered the year with a plan for low-single-digit revenue growth and 200 to 300 basis points of margin improvement. He said the company delivered against that plan in the first quarter and subsequently raised guidance, with the revenue update driven largely by fuel surcharge effects following higher oil prices, along with better trends in some markets tied to energy, chemicals and other areas.
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This Railroad Stock Is Chugging Along to a New All-Time HighBoone said the company is now targeting the higher end of its margin improvement range despite pressure from fuel surcharges. “Very happy with what we did in the first quarter,” he said. “A lot more to do.”
Pricing, Costs and Capital Efficiency Remain Priorities Boone highlighted three areas of focus as he returns to the CFO role: revenue, costs and capital. On revenue, he said Chief Executive Officer Steve Angel has emphasized the need to “get value” for the service CSX is providing. Boone said revenue growth depends on both volume and price, and that pricing is needed to cover cost inflation.
Golden Cross Alert: 3 Stocks With Serious Upside PotentialOn costs, Boone said CSX saw strong first-quarter performance across mechanical, engineering and transportation expenses. He said the finance organization is working to give operating teams better visibility and tools to identify savings and prevent costs from returning once efficiencies are found. Boone also said CSX is already building a pipeline of cost initiatives for 2027.
Capital efficiency is also a multi-year priority, particularly in maintenance capital. Boone said CSX is looking to use more data analytics in decisions about replacing track and rail, rather than relying primarily on physical inspection. He said the company is focused on improving return on invested capital, which he described as a metric aligned with compensation going forward.
Freight Demand Described as “Cautiously Optimistic” Boone described the current freight environment as “cautiously optimistic.” He said first-quarter weather created volatility in January and February, but trends improved in March across many markets.
In merchandise, Boone said nearly every market is growing except forest products, which remains pressured by production rationalization and housing exposure, though it has shown sequential improvement. He also pointed to strength in chemicals, aggregates, metals and domestic coal. Boone said low-cost U.S. energy is benefiting chemical producers and could support domestic and international demand.
Boone said CSX is seeing benefits from a tighter trucking market, particularly in domestic intermodal and in markets such as forest products where customers can choose between truck and rail. He said the company is focused more on expanding the overall rail opportunity and converting truck volume than on major share shifts among railroads.
On coal, Boone said utility demand has been strong, supported by winter weather and demand tied to AI and power needs. International coal markets were described as stable, with potential upside if pricing improves.
Network Performance and Intermodal Growth Asked about recent volume strength, including higher quarter-to-date carloads, Boone said improved operations, market conditions and demand trends are all contributing. He said Chief Operating Officer Mike Cory is not satisfied with current performance despite year-over-year improvement, adding that better service should lead to more wins.
Boone said CSX has capacity to grow across nearly every corridor. He noted that manifest traffic can often be added to existing trains, particularly as chemical customers increase shipments. On intermodal, he said the team has handled additional volume well and pointed to the Howard Street Tunnel as a growth opportunity.
Boone said CSX recently ran a double-stack train in that market and reiterated that the company previously outlined an opportunity for 75,000 to 125,000 additional loads. He said those gains would likely take two to three bid cycles to develop. Boone also cited opportunities tied to SMX service marketing Mexico into the Southeast.
AI and Data Tools Target Costs Boone said CSX is using data and AI tools in areas such as crew management, pricing and vehicle fleet oversight. He said crew management is one area Cory is particularly focused on, with AI helping analyze workforce trends, retirements and staffing needs.
Boone also highlighted the company’s vehicle fleet, saying CSX has GPS devices and data tools to monitor maintenance and usage. He said CSX spent more than $13,000 per truck in maintenance last year and is using better monitoring to manage vendors and employee driving behavior. He said the company reduced miles driven by its vehicle fleet by 20% in the first quarter and recently had zero drivers recorded at 90 miles per hour or more, after previously seeing many such instances.
Boone said the broader goal is to create processes that keep costs from “creep[ing] back into the system.”
Leverage, CapEx and Buybacks Boone said CSX’s leverage of about 3 times is on the higher end of where the company would like to be. He said credit rating agencies prefer a range of about 2.5 times to 2.75 times, which he described as a likely long-term operating area. He said leverage should come down substantially given the company’s guidance.
On capital spending, the moderator noted CSX’s target of $2.3 billion, down 20% year over year and equal to about 16% of revenue. Boone said there is “a lot of opportunity” to become more efficient with capital spending, while keeping safety as the primary focus. He said improved maintenance capital efficiency can free up investment for growth, technology and other areas.
Boone said CSX raised its free cash flow conversion guidance and said his goal is to move toward 100% conversion, though he added the company may not quite reach that level. On share repurchases, Boone said CSX will remain opportunistic and continue to be in the market each quarter, while preserving flexibility for market dislocations.
Boone closed by saying CSX’s leadership team is highly aligned around delivering results, though he again emphasized that the company must sustain its momentum beyond a strong first quarter.
About CSX NASDAQ: CSXCSX Corporation is a leading North American transportation company that provides rail-based freight services and supply-chain solutions. Its operating subsidiary, CSX Transportation, moves a wide range of goods for customers across multiple industries, using a combination of long-haul rail service, intermodal operations and terminal and yard services. The company focuses on delivering efficient, reliable freight transportation between major production centers, consumption markets and port gateways.
CSX's freight portfolio includes intermodal containers and trailers, bulk commodities, industrial products and specialized unit trains.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected].
Should You Invest $1,000 in CSX Right Now?Before you consider CSX, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and CSX wasn't on the list.
While CSX currently has a Moderate Buy rating among analysts, top-rated analysts believe these five stocks are better buys.
View The Five Stocks Here
Looking for the next FAANG stock before everyone has heard about it? Click the link to see which stocks MarketBeat analysts think might become the next trillion dollar tech company.
On May 19, 2026, we present a DCF analysis for CSX Corp CSX , a company that has shown impressive price performance over the past year, with a 49.7% increase. The stock has also seen a year-to-date rise of 27.8%, indicating strong market interest. Below are some key points regarding the valuation:
DCF Earnings-based intrinsic value of $30.68 vs current price of $46.19 (margin of safety: -50.5%) DCF FCF-based intrinsic value of $26.64 vs current price (second opinion: -73.4% margin of safety) GF Score™ of 87/100, indicating high reliability of the DCF inputs What Is CSX Worth? DCF Earnings-Based Model The DCF earnings-based model for CSX Corp uses a two-stage approach to estimate the intrinsic value of the stock. In the first stage, we project earnings growth over the next ten years, followed by a terminal growth phase. The assumptions used in this model are as follows:
Parameter Value Current EPS (TTM, excl. non-recurring) $1.70 10-Year Growth Rate 11.8% 10-Year Treasury Rate 4.33% Discount Rate (ceil(Treasury) + 6%) 11% Terminal Growth Rate 4% In the first stage, we expect the EPS to grow at a rate of 11.8% per year for the next ten years, which is then discounted at a rate of 11%. The calculated value for this growth stage is $17.69 per share. In the second stage, we apply a terminal growth rate of 4% for the following ten years, also discounted at 11%, resulting in a terminal stage value of $12.99 per share. The summary of these calculations is presented below:
Stage Description Value Growth Stage (Years 1-10) EPS growing at 11.8%, discounted at 11% $17.69 Terminal Stage (Years 11-20) 4% terminal growth, discounted at 11% $12.99 Intrinsic Value Growth + Terminal $30.68 With a current price of $46.19, the intrinsic value of $30.68 indicates that CSX is modestly overvalued, with a margin of safety of -50.5%. It is important to note that GuruFocus uses EPS excluding non-recurring items, as research shows that stock prices correlate more closely with earnings than with free cash flow. For further details, visit the CSX DCF Calculator.
What Does the Free Cash Flow DCF Say? The free cash flow (FCF) based intrinsic value for CSX is calculated at $26.64. When comparing this to the earnings-based intrinsic value of $30.68, both models suggest that CSX is modestly overvalued, with the FCF model indicating a margin of safety of -73.4%. This further supports the notion that the stock is trading above its intrinsic value.
How Does GF Value™ Compare to the DCF Models? The GF Value™ for CSX is calculated at $35.26, providing a third perspective on the valuation of the stock. GF Value™ is GuruFocus' proprietary measure derived from historical trading multiples, past business growth, and future performance estimates. All three models—the DCF earnings-based, DCF FCF-based, and GF Value™—indicate that CSX is currently overvalued. For more information, visit the GF Value™ page.
What Does CSX's GF Score™ Tell Us? The GF Score™ ranks stocks from 0 to 100 based on five key aspects: Financial Strength, Profitability, Growth, Valuation, and Momentum. Stocks with higher GF Score™ values have been found to generate higher long-term returns (backtested 2006-2021). Below is a summary of CSX's GF Score™ metrics:
Metric Rating GF Score™ 87/100 Financial Strength 4/10 Profitability 9/10 Growth 8/10 Valuation 5/10 Momentum 10/10 CSX has a predictability rank of 1/5 stars, indicating that the DCF model may be less reliable for this stock. For further insights, visit the CSX stock page.
Key Assumptions and Limitations It is important to note that DCF models are highly sensitive to the assumptions made regarding growth rates and discount rates. Stocks with low predictability ratings, such as CSX, tend to produce less reliable DCF estimates. The terminal growth rate of 4% used in this analysis is a simplifying assumption that may not reflect actual future performance.
What This Means for Investors In summary, the three valuation models—DCF earnings, DCF FCF, and GF Value™—all indicate that CSX is currently overvalued. This conclusion suggests that investors should exercise caution when considering an investment in CSX at its current price level. For the full DCF analysis, visit the CSX DCF Calculator. You can also explore the GF Value™ page, or use the GuruFocus Stock Screener to find undervalued predictable companies.
Frequently Asked Questions What is CSX's intrinsic value based on DCF?
earnings-based $30.68, FCF-based $26.64
Is CSX overvalued or undervalued?
Based on the DCF and GF Value™ consensus, CSX is overvalued.
How reliable is the DCF model for CSX?
The predictability rank of 1/5 indicates that the DCF model is less reliable for CSX.
This stock alert was generated using automated technology and GuruFocus financial data to provide readers with timely and accurate market reporting. This content was reviewed by GuruFocus editorial team prior to publication. Please send any questions or comments about this story to [email protected].
A month has gone by since the last earnings report for CSX (CSX - Free Report) . Shares have lost about 0.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is CSX due for a breakout? Well, first let's take a quick look at its most recent earnings report in order to get a better handle on the recent drivers for CSX Corporation before we dive into how investors and analysts have reacted as of late.
Earnings Beat at CSX in Q1CSX reported mixed first-quarter 2026 results wherein earnings surpassed the Zacks Consensus Estimate while revenues missed the mark.
Quarterly earnings per share of 43 cents surpassed the Zacks Consensus Estimate of 39 cents and increased 26% on a year-over-year basis as well. Results were aided revenue growth and reduction in operating expense
Total revenues of $3.48 billion missed the Zacks Consensus Estimate of $3.51 billion. The top line increased 2% year-over-year on the back of higher merchandise pricing, intermodal volume growth, higher domestic coal revenue, and increased fuel surcharge revenue. These were partially offset by a decrease in export coal revenue, including the impact of lower benchmark rates.
First-quarter operating income increased 20% year over year to $1.25 billion. Total expenses decreased 6% year over year. CSX’s operating margin during the March quarter rose to 36% from 30.4% in the year-ago quarter. Total volumes inched up 3% year over year, boosted by intermodal volumes.
Q1 Segmental Performance of CSX
Merchandise revenues grew 2% year over year to $2.18 billion (matched with our estimate figure) in the reported quarter. Merchandise volumes rose marginally to $631 million. Segmental revenue per unit inched up 2% year over year.
Intermodal revenues increased 5% year over year to $518 million (below our estimate of $551.5 million). Segmental volumes increased 6% while revenue per unit was down 1% year over year.
Coal revenues slid 1% year over year to $458 million in the reported quarter. Coal volumes inched down 1% year over year, while segmental revenue per unit fell marginally.
Trucking revenues totaled $202 million (above our estimate of $183.4 million), flat year over year. Other revenues rose 1% year over year to $116 million in the reported quarter.
CSX’s Liquidity
CSX exited the first quarter of 2026 with cash and cash equivalents of $964 million compared with $670 million at the end of prior quarter. Long-term debt of $18.2 billion was flat sequentially.
2026 Guidance From CSX
For full year 2026, CSX now expects mid-single digit revenue growth (including fuel, based on the current forward curve for diesel) compared with the prior guidance of low single-digit revenue growth.
Operating margin expansion is now anticipated towards the higher end of the 200-300 basis point range, while previously it was expected to be around 200-300 basis point.
Free Cash flow is now anticipated to increase more than 60% compared with the prior expectation of growth of at least 50%. CSX continues to expect capital expenditures to be below $2.4 billion.
How Have Estimates Been Moving Since Then?Since the earnings release, investors have witnessed a downward trend in estimates revision.
VGM ScoresAt this time, CSX has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
OutlookEstimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, CSX has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
On May 27, 2026, we present a discounted cash flow (DCF) analysis for CSX Corp CSX . The company has shown impressive price performance, with a year-to-date increase of 29.0% and a one-year gain of 53.5%. Below are key highlights from our analysis:
DCF Earnings-based intrinsic value of $30.68 vs current price of $46.61 (margin of safety: -51.9%) DCF FCF-based intrinsic value of $26.64 vs current price (margin of safety: -75.0%) GF Score™ of 87/100, indicating high reliability of the DCF inputs What Is CSX Worth? DCF Earnings-Based Model The DCF earnings-based model evaluates the intrinsic value of CSX by projecting its earnings growth over the next decade and applying a discount rate to account for the time value of money. The model is based on the following assumptions:
Parameter Value Current EPS (TTM, excl. non-recurring) $1.70 10-Year Growth Rate 11.8% 10-Year Treasury Rate 4.47% Discount Rate (ceil(Treasury) + 6%) 11% Terminal Growth Rate 4% In this two-stage model, we first calculate the growth stage value, where EPS is expected to grow at 11.8% per year for the first 10 years, discounted at 11%. The second stage accounts for a terminal growth rate of 4% over the following 10 years, also discounted at 11%. The calculation summary is as follows:
Stage Description Value Growth Stage (Years 1-10) EPS growing at 11.8%, discounted at 11% $17.69 Terminal Stage (Years 11-20) 4% terminal growth, discounted at 11% $12.99 Intrinsic Value Growth + Terminal $30.68 With a current price of $46.61 compared to the intrinsic value of $30.68, CSX appears modestly overvalued, with a margin of safety of -51.9%. It is important to note that GuruFocus uses EPS excluding non-recurring items, as research indicates that stock prices correlate more closely with earnings than free cash flow. For further details, visit the CSX DCF Calculator.
What Does the Free Cash Flow DCF Say? The free cash flow (FCF) based intrinsic value for CSX is calculated at $26.64. When comparing this value to the earnings-based intrinsic value of $30.68, both models indicate that CSX is modestly overvalued, with the FCF model showing a margin of safety of -75.0%. This reinforces the notion that CSX may not be a favorable investment at its current price levels.
How Does GF Value™ Compare to the DCF Models? The GF Value™ for CSX is calculated at $35.30, providing a third perspective on the valuation. GF Value™ is GuruFocus' proprietary measure derived from historical trading multiples, past business growth, and future performance estimates. All three models—DCF earnings, DCF FCF, and GF Value™—indicate that CSX is currently overvalued. For more information, visit the GF Value™ page.
What Does CSX's GF Score™ Tell Us? The GF Score™ ranks stocks from 0 to 100 based on five key aspects: Financial Strength, Profitability, Growth, Valuation, and Momentum. Stocks with higher GF Score™ values have been shown to generate higher long-term returns (backtested from 2006-2021). The following table summarizes CSX's GF Score™ metrics:
Metric Rating GF Score™ 87/100 Financial Strength 4/10 Profitability 9/10 Growth 8/10 Valuation 5/10 Momentum 10/10 CSX has a predictability rank of 1 out of 5 stars, indicating that the DCF model may be less reliable for this stock. For more details, visit the CSX stock page.
Key Assumptions and Limitations It is important to note that DCF models are highly sensitive to the assumptions made regarding growth rates and discount rates. Stocks with low predictability ratings, such as CSX, produce less reliable DCF estimates. The terminal growth rate of 4% is a simplifying assumption that may not reflect future realities.
What This Means for Investors In summary, all three valuation models—DCF earnings, DCF FCF, and GF Value™—suggest that CSX is currently overvalued. Investors should exercise caution and consider the implications of these findings before making investment decisions. For the full DCF analysis, visit the CSX DCF Calculator. You can also explore the GF Value™ page, or use the GuruFocus Stock Screener to find undervalued predictable companies.
Frequently Asked Questions What is CSX's intrinsic value based on DCF?
[Answer: earnings-based $30.68, FCF-based $26.64]
Is CSX overvalued or undervalued?
[Answer using DCF + GF Value™ consensus]
How reliable is the DCF model for CSX?
[Answer using predictability rank 1/5]
This stock alert was generated using automated technology and GuruFocus financial data to provide readers with timely and accurate market reporting. This content was reviewed by GuruFocus editorial team prior to publication. Please send any questions or comments about this story to [email protected].
Investors interested in Transportation stocks should always be looking to find the best-performing companies in the group. Is CSX (CSX - Free Report) one of those stocks right now? By taking a look at the stock's year-to-date performance in comparison to its Transportation peers, we might be able to answer that question.
CSX is one of 99 individual stocks in the Transportation sector. Collectively, these companies sit at #4 in the Zacks Sector Rank. The Zacks Sector Rank includes 16 different groups and is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors.
The Zacks Rank is a proven model that highlights a variety of stocks with the right characteristics to outperform the market over the next one to three months. The system emphasizes earnings estimate revisions and favors companies with improving earnings outlooks. CSX is currently sporting a Zacks Rank of #2 (Buy).
The Zacks Consensus Estimate for CSX's full-year earnings has moved 2.6% higher within the past quarter. This shows that analyst sentiment has improved and the company's earnings outlook is stronger.
Based on the most recent data, CSX has returned 24.9% so far this year. At the same time, Transportation stocks have gained an average of 12.8%. As we can see, CSX is performing better than its sector in the calendar year.
EuroDry (EDRY - Free Report) is another Transportation stock that has outperformed the sector so far this year. Since the beginning of the year, the stock has returned 79.2%.
The consensus estimate for EuroDry's current year EPS has increased 29.9% over the past three months. The stock currently has a Zacks Rank #2 (Buy).
Looking more specifically, CSX belongs to the Transportation - Rail industry, which includes 9 individual stocks and currently sits at #179 in the Zacks Industry Rank. On average, stocks in this group have gained 16.6% this year, meaning that CSX is performing better in terms of year-to-date returns.
EuroDry, however, belongs to the Transportation - Shipping industry. Currently, this 22-stock industry is ranked #44. The industry has moved +36.4% so far this year.
Going forward, investors interested in Transportation stocks should continue to pay close attention to CSX and EuroDry as they could maintain their solid performance.
JACKSONVILLE, Fla., June 08, 2026 (GLOBE NEWSWIRE) -- CSX Corp. (NASDAQ: CSX) today unveiled two commemorative locomotives celebrating the 250th anniversary of the United States, highlighting the railroad’s enduring role in building the nation’s economy.
“Freight railroads have powered American growth and prosperity for more than two centuries,” said Steve Angel, president and chief executive officer of CSX. “From the Baltimore and Ohio Railroad, one of CSX’s predecessors and the nation’s first common carrier, to today’s CSX system, rail remains essential to the U.S. economy. These locomotives celebrate that unique American legacy and the people who made it possible.”
The locomotives—numbered 250 and 2026—were painted at CSX’s Waycross, Georgia, facility. Both are modernized, high-horsepower CM44AH units designed for efficient, reliable mainline service.
Each locomotive features a distinct design. Unit 250 celebrates America’s anniversary year with a bold Stars and Stripes theme, while Unit 2026 features the American bald eagle and the phrase “United We Stand,” emphasizing national strength and unity.
CSX’s presence in the nation’s capital reinforces these themes. The company owns and operates most of the rail infrastructure in Washington, D.C., supporting the daily movement of goods across the region. Its workforce reflects a similar commitment to service, with approximately one in five employees having served in the U.S. military.
The locomotives will soon travel to Washington for a ceremonial run through the capital. After the event, both units will enter regular service across the CSX network.
About CSX
CSX, based in Jacksonville, Florida, is a premier transportation company. It provides rail, intermodal and rail-to-truck transload services and solutions to customers across a broad array of markets, including energy, industrial, construction, agricultural and consumer products. For nearly 200 years, CSX has played a critical role in the nation’s economic expansion and industrial development. Its network connects every major metropolitan area in the eastern United States, where nearly two-thirds of the nation’s population resides. It also links more than 240 short-line railroads and more than 70 ocean, river and lake ports with major population centers and farming towns alike. More information about CSX Corporation and its subsidiaries is available at www.csx.com. Like us on Facebook and follow us on X, formerly known as Twitter.
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Matthew Korn, CFA, Investor Relations
904-366-4515
Alex Coffey walks us through Workday's (WDAY) earnings, pointing to the software company's margins as the big standout. He says guidance leans conservative but stable, offering room for shares to rally.
Workday, Inc. (NASDAQ:WDAY) on Thursday posted strong first-quarter financial results.
Workday reported quarterly earnings of $2.66 per share, which beat the Street estimate of $2.51 by 5.98%, according to Benzinga Pro data. Quarterly revenue came in at $2.54 billion, which beat the analyst consensus estimate of $2.52 billion. Subscription revenues were $2.35 billion, an increase of 14.3% from the same period last year.
"We had a great Q1, and it makes one thing clear: Workday is ready for this AI moment. Our core business is strong, our AI strategy is working, and we're moving with the speed and focus required to lead," said Aneel Bhusri, CEO of Workday.
Workday expects fiscal 2027 subscription revenue of $9.93 billion to $9.95 billion.
Workday shares gained 5.2% to trade at $128.12 on Friday.
These analysts made changes to their price targets on Workday following earnings announcement.
Considering buying WDAY stock? Here’s what analysts think:
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Workday’s NASDAQ: WDAY reported strong Q1 earnings and guidance, which should not be too surprising, as the AI-driven SaaS apocalypse isn’t quite what it was made out to be. Utility-providing platforms such as Workday are leaning hard into AI; AI applications are in increasing demand, and business is good.
Workday Today
$130.80 +0.27 (+0.21%)
As of 04:00 PM Eastern
52-Week Range$110.36▼
$249.85P/E Ratio40.88
Price Target$185.03
For Workday, as evidenced by the post-release stock price action, a likely outcome is a stock price rebound, potentially including the full recovery of lost shareholder value. In this scenario, WDAY's stock price could return to the upper end of its long-term trading range, adding more than 100% to its stock price.
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Valuation metrics suggest the 100% stock price target is an easy reach. The company traded at only 11X its current-year outlook ahead of its recent earnings release, and the results were better than expected. Looking ahead, the longer-term forecasts are also likely to be cautious, placing this stock at only 7X its 2030 adjusted earnings per share (EPS). This could open the door to a 200% to 300% increase in the stock price over the next few years. The only thing WDAY needs to do is continue executing its strategy and grow in line with the outlook.
Workday’s strategy is solid, comprising a multicloud/crosscloud ecosystem. While it doesn’t integrate directly with major AI models, its platform enables 3rd-party interaction, including the application of agentic AI. The company also provides numerous organic AI tools that help unlock enterprise value, including more than 120 proprietary AI models with specialized focus, the Agent Partner Network, and the Agent System of Record. The Agent Partner Network links WDAY platform tools with major service providers, including Amazon NASDAQ: AMZN, Microsoft NASDAQ: MSFT, and Alphabet NASDAQ: GOOGL, while the Agent System of Record integrates 3rd-party applications into Workday agentic workflows.
Workday Outperforms and Raises Guidance: Guidance Is CautiousWorkday had a solid quarter in Q1, affirming its strategy and position in the enterprise AI ecosystem. The company reported approximately $2.45 billion in net revenue, up 13.5% year-over-year (YOY) and 80 basis points better than MarketBeat’s reported consensus. The revenue strength was underpinned by 14.3% subscription growth, which, in turn, was driven by client wins and service penetration. Internal highlights include the strength of hiring services, up 44% year over year (YOY), and agentic AI, which more than doubled sequentially.
Margin news was also good, with the company’s operating margin expanding by 160 basis points due to improved revenue leverage and operational quality. The critical detail is that operating income, cash flow, and earnings grew at an accelerated rate, and the margin strength is expected to persist. Operating cash flow increased by 52%, strengthening the capital return outlook, while adjusted earnings grew by 19% and outpaced the consensus by 550 bps.
Guidance was a catalyst for higher share prices the day after earnings were released. The company maintained its revenue target while widening its margin and improving its earnings outlook, both better than expected by consensus forecasts. Guidance is likely to be cautious, given the Q1 strengths and backlog, which increased by 15.5%, and the accelerating use of agentic tools.
Capital Return Underpins WDAY Stock Price OutlookCash flow and capital returns are significant factors in this market because Workday accelerated its share buybacks in the late fiscal 2026 and has sustained the trend into its 2027 fiscal year. Buybacks totaled nearly $1.6 billion, reducing the count by nearly 6% YOY, and are expected to remain robust in upcoming quarters.
Balance sheet highlights reflect an aggressive cash buyback, with cash, current, and total assets down; however, they are offset by reduced debt and total liabilities. The net result is increased equity despite the increase in treasury shares, and, more importantly, the increase in equity exceeds the value of treasury stock, indicating value gains on top of share count reductions and accelerated shareholder value gains.
Analysts' initial responses to the release were favorable. A notable theme was relief that AI is not negatively disrupting the business. Additionally, margin strength, capital returns, guidance and backlog were noted. The likely outcome is that analysts revert to a more bullish posture, including raising price targets to help strengthen the market floor. As it stands, WDAY stock traded below the analyst low-end target ahead of the release, suggesting a low-single-digit upside at minimum, with as much as 50% upside at the consensus. Assuming WDAY continues to show momentum in the upcoming quarters, analysts' trends will strengthen as well.
Stock price action following the release was also bullish. WDAY surged more than 5% in premarket trading and opened higher, confirming support at long-term lows. The question now is how quickly WDAY’s price will rise. Not only are analysts indicating substantial upside, but institutions have been accumulating, short interest is relatively high, and there are reasons for all three groups to buy stock.
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Key Takeaways Workday launched Sana for ITSM and a Travel Agent, adding AI for HR, finance and IT workflows.WDAY's Sana for ITSM automates onboarding, resets and access tasks using company data and policies.WDAY's Travel Agent links booking, approvals and auto expense reports, boosting visibility into spending. Workday, Inc. (WDAY - Free Report) has unveiled Sana for IT Service Management (ITSM) and a new Travel Agent to strengthen its artificial Intelligence (AI)-powered platform for HR, finance and IT. These new AI agents are designed to automate workplace tasks, improve employee productivity and simplify workflows by bringing multiple functions into a single conversational experience.
Built on Workday’s AI platform, Sana for ITSM helps organizations automate employee IT support tasks, which include onboarding, offboarding, password resets, software installation and access management. The solution uses company data and policies to handle requests automatically and improve workflow efficiency. It is expected to reduce manual IT helpdesk tasks while improving response times and productivity.
The company also launched a new Travel Agent that brings travel planning, booking, approvals and expense management into one platform. Employees can book flights and hotels, manage schedules and automatically create expense reports within the system. The solution is designed to simplify travel management and give finance teams better visibility into company spending.
Both AI tools follow Workday’s security policies and business processes. The initiative supports Workday’s strategy to grow its enterprise AI business and improve operational efficiency through automation.
How Competitors Are Advancing in Enterprise AI?Workday faces competition from Oracle Corporation (ORCL - Free Report) and Automatic Data Processing, Inc. (ADP - Free Report) . Oracle is expanding its focus on enterprise AI through Oracle Cloud Infrastructure and AI-powered business applications. The company has introduced AI services and AI-powered business applications to help companies automate workflows and improve productivity. Oracle is adding AI features to its finance, supply chain and cloud applications to improve business operations.
ADP is strengthening its position in enterprise AI across HR and workforce management operations. The company is using AI tools to automate hiring, payroll, employee support and workforce analytics. ADP is adding generative AI features to improve productivity and decision-making for businesses.
Workday’s Price Performance, Valuation & EstimatesWorkday shares have lost 46.5% over the past year compared with the industry’s decline of 12.4%.
Image Source: Zacks Investment Research
From a valuation standpoint, Workday trades at a forward price-to-sales ratio of 2.98, below the industry average of 3.79.
Image Source: Zacks Investment Research
Earnings estimates for fiscal 2027 have increased 0.1% to $10.55 over the past 60 days, while the same for fiscal 2028 have increased 0.2% to $12.34.
Image Source: Zacks Investment Research
Workday currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Adaptive Decision Intelligence Lets Teams Ask Questions in Natural Language, Explore Scenarios, and Commit Decisions to the Governed Plan – in Minutes, Not Days
NATIONAL HARBOR, Md., /PRNewswire/ -- Gartner Finance Symposium/Xpo™ -- Workday, Inc. (NASDAQ: WDAY), the enterprise AI platform for HR, finance, and IT, today introduced Adaptive Decision Intelligence, a new AI capability in Workday Adaptive Planning. Finance teams spend days pulling data from disconnected systems to provide the answers leadership needs now. Adaptive Decision Intelligence provides a single experience where finance and operations teams can ask questions in natural language, model scenarios in minutes, and commit decisions directly into the governed plan – without spreadsheets, data wrangling, or waiting on the FP&A team to rebuild a model.
Workday announces Adaptive Decision Intelligence "Many AI planning tools today still leave analysts stitching together scenarios in spreadsheets every time a new business question comes up," said Ben Pierce, general manager, Workday Adaptive Planning. "Adaptive Decision Intelligence is designed to close that gap, turning hours of manual data work into minutes of guided exploration so planning teams can move from a question to a governed decision in the plan before the meeting ends."
Adaptive Decision Intelligence uses the data teams already have in Adaptive Planning, combined with operational data from across the business, to answer questions that previously required days of manual work across systems. Here's how a planning team might use Adaptive Decision Intelligence in practice:
Combine plans, actuals, and operational data such as CRM pipeline, customer revenue, or project costs to see the full picture behind a performance question. When a region misses its target, a finance leader can bring together Adaptive Planning actuals and plan with sales pipeline and headcount data for that region to see whether the issue is coverage, conversion, or productivity. Ask direct questions in natural language and get clear explanations that connect drivers to outcomes. A question like "Why did Q3 revenue in EMEA fall short of plan?" can return a breakdown showing how territory coverage, win rates, deal size, and ramping sellers contributed to the gap, with a click‑through view by product line. Get recommendations for how to close a gap, compare scenarios side by side, and run Monte Carlo simulations to show a range of likely outcomes for each option. In one view, Adaptive Decision Intelligence can show the impact of options such as adding sales headcount, shifting quota‑bearing roles from lower‑performing regions, or improving win rates by a few points, including the effect of each choice on Q4 revenue and margins. Select the best scenario and save it as the plan going forward, so future forecasts and reports in Adaptive Planning are based on that decision. When leadership approves a scenario, Adaptive Decision Intelligence commits it back to the governed plan with assumptions, data sources, and approval chain intact. Moving Beyond Shadow Spreadsheets
Today, planning and analysis is a fragmented process. On one side, there is the governed planning environment that supports budgets, forecasts, and reporting, where structure, controls, and audit trails are essential. On the other, there is ad hoc work and urgent requests that often live in one‑off spreadsheets built to answer urgent questions, test new ideas, or combine data that hasn't been modeled yet. That split means the work that shapes big decisions often happens outside the systems that run the business, in files that are hard to govern, hard to share, and hard to turn into an actual plan.
Adaptive Decision Intelligence brings that side work into the same secure system as the main plan. Teams will be able to bring together data from Adaptive Planning and systems across the enterprise – including CRM, HR, and data warehouses – to ask questions, test ideas, and adjust drivers in a live planning environment, without the risk of breaking the plan or fragmenting work across spreadsheets. It follows the same security and access rules teams already use and keeps a record of the data and assumptions behind each scenario.
In most organizations, the kind of ad hoc, multi-step exploratory analysis that produces real answers gets deferred because every new question means days of manual work. A CFO asks a question on Tuesday and gets an answer on Friday, at which point the decision window has often already closed. Adaptive Decision Intelligence changes that. Teams can investigate questions, any time, and put a complete, confident recommendation in front of leadership with enough time to change the outcome.
Explore Freely with Full Auditability
Every answer is grounded in the same definitions and data customers already trust in Adaptive Planning, so calculations and permissions are enforced consistently across both exploratory work and governed plans.
That consistency makes it easier to control who can see and change assumptions, to track how a model evolved over time, and to ensure that approved decisions show up consistently in planning, reporting, and downstream processes. Every scenario carries an audit trail that shows which data sources were used, which assumptions were applied, and who approved the final version that was committed back into the plan.
Availability
Adaptive Decision Intelligence is now available to customers enrolled in its early adopter program and is expected to be more broadly available later this year.
For More Information
Read more about Workday's vision for the future of finance on the Workday blog. Visit the Workday Booth at the Gartner® Finance Symposium/Xpo™, Booth #301. GARTNER and Finance Symposium/Xpo™ are trademarks of Gartner, Inc. and/or its affiliates.
About Workday
Workday operates at the heart of the enterprise – HR, finance, and IT – where the margin for error is effectively zero. By tightly coupling AI with the context, guardrails, and trusted processes that run the business, Workday goes beyond AI that assists with work to agents that are capable of driving measurable outcomes. More than 11,500 organizations worldwide, including more than 65% of the Fortune 500, trust Workday to deliver. For more information about Workday, visit workday.com.
Forward-Looking Statements
This press release contains forward-looking statements including, among other things, statements regarding Workday's plans, beliefs, and expectations. These forward-looking statements are based only on currently available information and our current beliefs, expectations, and assumptions. Because forward-looking statements relate to the future, they are subject to inherent risks, uncertainties, assumptions, and changes in circumstances that are difficult to predict and many of which are outside of our control. If the risks materialize, assumptions prove incorrect, or we experience unexpected changes in circumstances, actual results could differ materially from the results implied by these forward-looking statements, and therefore you should not rely on any forward-looking statements. Risks include, but are not limited to, risks described in our filings with the Securities and Exchange Commission ("SEC"), including our most recent report on Form 10-Q or Form 10-K and other reports that we have filed and will file with the SEC from time to time, which could cause actual results to vary from expectations. Workday assumes no obligation to, and does not currently intend to, update any such forward-looking statements after the date of this release, except as required by law.
Any unreleased services, features, or functions referenced in this document, our website, or other press releases or public statements that are not currently generally available are subject to change at Workday's discretion and may not be delivered as planned or at all. Customers who purchase Workday services should make their purchase decisions based upon services, features, and functions that are currently available.
Workday (WDAY - Free Report) closed the last trading session at $124.02, gaining 2.3% over the past four weeks, but there could be plenty of upside left in the stock if short-term price targets set by Wall Street analysts are any guide. The mean price target of $182.11 indicates a 46.8% upside potential.
The mean estimate comprises 37 short-term price targets with a standard deviation of $46.07. While the lowest estimate of $115.00 indicates a 7.3% decline from the current price level, the most optimistic analyst expects the stock to surge 164.5% to reach $328.00. It's very important to note the standard deviation here, as it helps understand the variability of the estimates. The smaller the standard deviation, the greater the agreement among analysts.
While the consensus price target is highly sought after by investors, the ability and unbiasedness of analysts in setting price targets have long been questionable. And investors making investment decisions solely based on this tool would arguably do themselves a disservice.
But, for WDAY, an impressive average price target is not the only indicator of a potential upside. Strong agreement among analysts about the company's ability to report better earnings than they predicted earlier strengthens this view. While a positive trend in earnings estimate revisions doesn't gauge how much a stock could gain, it has proven to be powerful in predicting an upside.
Price, Consensus and EPS Surprise
Here's What You Should Know About Analysts' Price TargetsAccording to researchers at several universities across the globe, a price target is one of many pieces of information about a stock that misleads investors far more often than it guides. In fact, empirical research shows that price targets set by several analysts, irrespective of the extent of agreement, rarely indicate where the price of a stock could actually be heading.
While Wall Street analysts have deep knowledge of a company's fundamentals and the sensitivity of its business to economic and industry issues, many of them tend to set overly optimistic price targets. Are you wondering why?
They usually do that to drum up interest in shares of companies that their firms either have existing business relationships with or are looking to be associated with. In other words, business incentives of firms covering a stock often result in inflated price targets set by analysts.
However, a tight clustering of price targets, which is represented by a low standard deviation, indicates that analysts have a high degree of agreement about the direction and magnitude of a stock's price movement. While that doesn't necessarily mean the stock will hit the average price target, it could be a good starting point for further research aimed at identifying the potential fundamental driving forces.
That said, while investors should not entirely ignore price targets, making an investment decision solely based on them could lead to disappointing ROI. So, price targets should always be treated with a high degree of skepticism.
Why WDAY Could Witness a Solid UpsideAnalysts' growing optimism over the company's earnings prospects, as indicated by strong agreement among them in revising EPS estimates higher, could be a legitimate reason to expect an upside in the stock. That's because empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
Over the last 30 days, the Zacks Consensus Estimate for the current year has increased 0.4%, as one estimate has moved higher compared to no negative revision.
Moreover, WDAY currently has a Zacks Rank #2 (Buy), which means it is in the top 20% of more than 4,000 stocks that we rank based on four factors related to earnings estimates. Given an impressive externally-audited track record, this is a more conclusive indication of the stock's potential upside in the near term. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>> .
Therefore, while the consensus price target may not be a reliable indicator of how much WDAY could gain, the direction of price movement it implies does appear to be a good guide.
Investors looking for stocks in the Internet - Software sector might want to consider either Workday (WDAY - Free Report) or Spotify (SPOT - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, Workday is sporting a Zacks Rank of #2 (Buy), while Spotify has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that WDAY has an improving earnings outlook. But this is only part of the picture for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
WDAY currently has a forward P/E ratio of 11.81, while SPOT has a forward P/E of 35.65. We also note that WDAY has a PEG ratio of 0.59. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. SPOT currently has a PEG ratio of 1.28.
Another notable valuation metric for WDAY is its P/B ratio of 4.77. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, SPOT has a P/B of 11.63.
These are just a few of the metrics contributing to WDAY's Value grade of B and SPOT's Value grade of D.
WDAY sticks out from SPOT in both our Zacks Rank and Style Scores models, so value investors will likely feel that WDAY is the better option right now.
Workday Inc (NASDAQ:WDAY) was reinstated with a 'Neutral' rating and a $140 price objective by Bank of America, which said the enterprise software company remains a high-quality franchise but faces limited near-term catalysts as growth moderates.
Shares traded at about $124 on Wednesday, down about 42% in the year-to-date.
The bank wrote that Workday continues to benefit from a deeply entrenched position in human capital management, payroll and employee data systems, supported by high switching costs and regulatory requirements.
However, analysts cautioned that investor focus has shifted from the company’s franchise quality toward questions around its ability to reaccelerate growth.
Bank of America highlighted that revenue growth has slowed from roughly 30% several years ago to the low-to-mid teens, with the firm forecasting revenue growth of 11.5% in fiscal 2027 and 11.3% in fiscal 2028. The analysts expect Workday to follow a more normalized, mature software-as-a-service growth trajectory over the coming years.
The firm highlighted three areas shaping the debate around future growth: potential pressure on customer seat counts, increasing competition tied to artificial intelligence, and evolving software pricing models.
While Bank of America sees little risk of Workday being displaced given its core role in enterprise systems, the firm warned that the company could face pressure on its traditional seat-based pricing model as customers rationalize headcount and the industry gradually shifts toward usage- or agent-based pricing structures.
The bank also noted that Workday’s AI-related initiatives, including Illuminate and Sana, represent a strategically important response, though monetization opportunities remain early and may take time to offset pressure on legacy pricing models.
Further, they pointed to several longer-term growth opportunities, including expansion in government, international markets, Workday Student, and Financials cross-selling. However, those initiatives have yet to produce a clear acceleration in growth, while enterprise deal cycles are lengthening and competition in financial software remains elevated.
Bank of America valued the stock at 9 times estimated calendar 2027 enterprise value to free cash flow, describing Workday as a “high-quality but maturing SaaS asset.” The firm added that improved visibility into growth initiatives would likely be needed to support further multiple expansion.
Sana Self-Service Agent from Workday is Now Available in Gemini Enterprise, Delivering Multi-Agent Orchestration Directly Where Employees Already Work
Gemini Becomes Default AI Model for Sana for Workday
Workday and Google Cloud Will Collaborate on a Next Generation of Workday Agents for HR and Finance
, /PRNewswire/ -- Workday, Inc. (NASDAQ: WDAY) and Google Cloud today announced an expanded strategic partnership to bring AI agents for HR and finance closer to the people who need them, directly inside the applications they use every day. By combining the Workday Agent System of Record (ASOR) and agent roadmap with Google Cloud's enterprise-ready agent platform and leading models, the partnership will create a single, trusted foundation where agents from Workday, Google Cloud, and third-parties work together on real HR and finance workflows, with built-in governance and security.
The new collaboration integrates the Sana Self-Service Agent from Workday directly into Gemini Enterprise. Employees can now ask a question in Gemini Enterprise and get a personal answer pulled directly from Workday, with all the right policies and permissions already applied. In addition, Gemini is now the default AI model inside Sana for Workday, giving customers a more consistent high-quality experience for the nuanced work HR and finance teams manage daily. A deeper connection between Gemini and Workday Data Cloud enables companies to move HR and finance work from static reports to immediate action, without data ever leaving Workday's secure environment.
"Our customers want HR and finance at their fingertips, not scattered across a dozen applications," said Gerrit Kazmaier, president, product and technology, Workday. "Together with Google Cloud, we're putting the answers and actions people need where they already work, backed by the security, rules, and approvals inherent to Workday."
"This partnership significantly expands integrations between Google Cloud and Workday in order to make AI agents more useful and accessible across the enterprise," said Karthik Narain, chief product and business officer at Google Cloud. "From the model layer to the platform layer, Gemini and Google Cloud will now underpin some of the most critical and common workflows in human resources and finance departments globally, so employees can get faster, more accurate answers, streamline repetitive tasks, and ultimately focus on the work that matters most."
Real Work, Done Where People Already Are
Workday's Sana Self-Service Agent is available now on Google Cloud's Agent Marketplace, with more agents from Workday launching later this year. The same self‑service capabilities employees and managers already use in Workday are now directly accessible in Gemini Enterprise, so they can stay in one experience while Workday agents handle the work behind the scenes. With Workday agents in Gemini Enterprise, employees and managers will be able to handle scenarios such as:
Everyday self-service for employees: Employees can check time-off balances, update personal information, view payslips, review tax withholding information, or request leave in a single conversational flow. Team management: Managers can review team goals, approve timesheets in bulk, start performance reviews, or submit payroll input without leaving the AI experience. Policy and spend guidance: Finance users can ask about expense and travel policies, check eligibility for corporate cards, and receive guided assistance to create requests or open cases when action is needed. The partnership supports Agent-to-Agent (A2A), Agent-to-UI (A2UI) and Model Context Protocol (MCP) approaches so AI agents can share information and autonomously hand off tasks to each other in real time, all within a single workflow. As part of this expanded partnership, Alphabet will benefit from the collaboration, leveraging Gemini Enterprise Agent Platform to build and run a custom Workday agent to streamline and automate key workflows for their Workday administrators.
"At Accenture, our people power our business and we believe that great talent drives great outcomes for our clients," said Colin Anderson, COO of HR at Accenture. "This expanded partnership between Workday and Google Cloud will allow us to bring the best of Workday and Google together to accelerate how we reinvent HR for ourselves, as well as our clients."
Gemini Becomes the Default AI Model for Sana for Workday
Sana for Workday gives CHROs, CFOs, managers, and employees a single place to ask questions, trigger workflows, and work with Workday agents. As Gemini becomes the default AI model for Sana for Workday, customers benefit from Gemini's advanced reasoning, multilingual support, and multi-modal capabilities under the hood, combined with Workday's security, business rules, and approval chains on top.
With Gemini as the default AI model for Sana for Workday, agents provide stronger support for HR and finance teams in the work that matters most: understanding nuance in policies, handling multilingual workforces, and reasoning through requests that don't fit a single template. Customers see those improvements without changing how they already use Workday.
Because Sana is built to support multiple AI models, customers keep the flexibility to choose a different model when their business requires it.
Zero-Copy Access to HR and Finance Data Through Workday Data Cloud and BigQuery
Workday and Google Cloud are strengthening the data foundation behind these AI experiences, allowing customers to safely combine Workday data with other business data for deeper analysis. Using advanced zero-copy technology, data can be shared and queried between Workday Data Cloud and Google Cloud Lakehouse without ever being moved or duplicated. Each system reads the data precisely where it lives, ensuring strict security permissions and business rules remain fully intact.
This seamless connection allows organizations to analyze business trends and financial risks faster. Workday agents can then instantly turn those insights into action, allowing teams to securely automate day-to-day tasks. Additionally, agents on Gemini Enterprise will enable conversational analytics, allowing users across the organization to simply talk to their data to get instant answers.
Top Global System Integrators Accelerate Customer Outcomes and Value
To help joint enterprise customers realize the value of the agentic enterprise faster, Workday and Google Cloud are partnering closely with leading Global System Integrators (GSIs), including Accenture, Deloitte, and KPMG. These partners bring essential stakeholder, governance, technical, and business process knowledge that spans across departments, systems, and teams. Leveraging Google Cloud's recently-announced innovation fund to accelerate customer value, these companies will work directly with clients to identify and deploy against the most impactful agentic use cases.
"Enterprise leaders are telling us they need AI that is interoperable, secure, and immediately actionable," said Brian Anderson, Workday practice leader, KPMG. "With Gemini Enterprise powering Sana agents, KPMG is uniquely positioned to help organizations integrate these powerful multi-agent ecosystems. Whether we are deploying the Financial Close Companion to streamline monthly reporting or transforming day-to-day HR self-service, this partnership enables us to deliver the true impact of agentic AI directly into our clients' daily workflows."
Availability
Sana Self-Service Agent in Gemini Enterprise is available today in early access for eligible Workday customers. Workday Data Cloud is available to early adopter customers now and will be generally available later this year. About Google Cloud
Google Cloud offers a powerful, optimized AI stack — including AI infrastructure, leading models like Gemini, data management capabilities, multicloud security solutions, developer tools and platform, as well as agents and applications — that enables organizations to transform their business for the Agentic Era. Customers in more than 200 countries and territories turn to Google Cloud as their trusted technology partner.
About Workday
Workday operates at the heart of the enterprise – HR, finance, and IT – where the margin for error is effectively zero. By tightly coupling AI with the context, guardrails, and trusted processes that run the business, Workday goes beyond AI that assists with work to agents that are capable of driving measurable outcomes. More than 11,500 organizations worldwide, including more than 65% of the Fortune 500, trust Workday to deliver. For more information about Workday, visit workday.com.
Forward-Looking Statements
This press release contains forward-looking statements including, among other things, statements regarding Workday's plans, beliefs, and expectations. These forward-looking statements are based only on currently available information and our current beliefs, expectations, and assumptions. Because forward-looking statements relate to the future, they are subject to inherent risks, uncertainties, assumptions, and changes in circumstances that are difficult to predict and many of which are outside of our control. If the risks materialize, assumptions prove incorrect, or we experience unexpected changes in circumstances, actual results could differ materially from the results implied by these forward-looking statements, and therefore you should not rely on any forward-looking statements. Risks include, but are not limited to, risks described in our filings with the Securities and Exchange Commission ("SEC"), including our most recent report on Form 10-Q or Form 10-K and other reports that we have filed and will file with the SEC from time to time, which could cause actual results to vary from expectations. Workday assumes no obligation to, and does not currently intend to, update any such forward-looking statements after the date of this release, except as required by law.
Any unreleased services, features, or functions referenced in this document, our website, or other press releases or public statements that are not currently available are subject to change at Workday's discretion and may not be delivered as planned or at all. Customers who purchase Workday services should make their purchase decisions based upon services, features, and functions that are currently available.
For new and old investors, taking full advantage of the stock market and investing with confidence are common goals. Zacks Premium provides lots of different ways to do both.
The research service features daily updates of the Zacks Rank and Zacks Industry Rank, full access to the Zacks #1 Rank List, Equity Research reports, and Premium stock screens, all of which will help you become a smarter, more confident investor.
Zacks Premium also includes the Zacks Style Scores.
What are the Zacks Style Scores? The Zacks Style Scores, developed alongside the Zacks Rank, are complementary indicators that rate stocks based on three widely-followed investing methodologies; they also help investors pick stocks with the best chances of beating the market over the next 30 days.
Each stock is assigned a rating of A, B, C, D, or F based on their value, growth, and momentum characteristics. Just like in school, an A is better than a B, a B is better than a C, and so on -- that means the better the score, the better chance the stock will outperform.
The Style Scores are broken down into four categories:
Value ScoreValue investors love finding good stocks at good prices, especially before the broader market catches on to a stock's true value. Utilizing ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and many other multiples, the Value Style Score identifies the most attractive and most discounted stocks.
Growth ScoreGrowth investors are more concerned with a stock's future prospects, and the overall financial health and strength of a company. Thus, the Growth Style Score analyzes characteristics like projected and historic earnings, sales, and cash flow to find stocks that will see sustainable growth over time.
Momentum ScoreMomentum traders and investors live by the saying "the trend is your friend." This investing style is all about taking advantage of upward or downward trends in a stock's price or earnings outlook. Employing factors like one-week price change and the monthly percentage change in earnings estimates, the Momentum Style Score can indicate favorable times to build a position in high-momentum stocks.
VGM ScoreIf you want a combination of all three Style Scores, then the VGM Score will be your friend. It rates each stock on their combined weighted styles, helping you find the companies with the most attractive value, best growth forecast, and most promising momentum. It's also one of the best indicators to use with the Zacks Rank.
How Style Scores Work with the Zacks Rank A proprietary stock-rating model, the Zacks Rank utilizes the power of earnings estimate revisions, or changes to a company's earnings outlook, to help investors create a successful portfolio.
It's highly successful, with #1 (Strong Buy) stocks producing an unmatched +23.7% average annual return since 1988. That's more than double the S&P 500. But because of the large number of stocks we rate, there are over 200 companies with a Strong Buy rank, plus another 600 with a #2 (Buy) rank, on any given day.
But it can feel overwhelming to pick the right stocks for you and your investing goals with over 800 top-rated stocks to choose from.
That's where the Style Scores come in.
To maximize your returns, you want to buy stocks with the highest probability of success. This means picking stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B. If you find yourself looking at stocks with a #3 (Hold) rank, make sure they have Scores of A or B as well to ensure as much upside potential as possible.
Since the Scores were created to work together with the Zacks Rank, the direction of a stock's earnings estimate revisions should be a key factor when choosing which stocks to buy.
For instance, a stock with a #4 (Sell) or #5 (Strong Sell) rating, even one that boasts Scores of A and B, still has a downward-trending earnings forecast, and a much greater likelihood its share price will decline as well.
Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.
Stock to Watch: Workday (WDAY - Free Report) Founded in 2005 and headquartered in Pleasanton, CA, Workday Inc. (WDAY - Free Report) is a provider of enterprise-level software solutions for financial management and human resource domains. The company’s cloud-based platform combines finance and HR in a single system that makes it easier for organizations to provide analytical insights and decision support.
WDAY is a #2 (Buy) on the Zacks Rank, with a VGM Score of A.
It also boasts a Value Style Score of B thanks to attractive valuation metrics like a forward P/E ratio of 11.79; value investors should take notice.
Two analysts revised their earnings estimate higher in the last 60 days for fiscal 2027, while the Zacks Consensus Estimate has increased $0.02 to $10.56 per share. WDAY also boasts an average earnings surprise of +7.2%.
With a solid Zacks Rank and top-tier Value and VGM Style Scores, WDAY should be on investors' short list.
New joint solution delivers live ERP actuals, operational drivers, and integrated plan data directly into Workday Adaptive Planning - closing the gap between when data is available and when decisions need to happen.
FOSTER CITY, Calif.--(BUSINESS WIRE)--Incorta, the leading data foundation platform for decision intelligence and AI, today announced Adaptive Data Foundation powered by Incorta, a finance-owned data layer purpose-built for Workday Adaptive Planning. Available now, the solution connects ERP systems, CRMs, HRIS platforms, and operational planning tools directly to Workday Adaptive Planning - with data refreshes as frequently as every five minutes - so FP&A teams can forecast earlier, analyze deeper, and act before it's too late to change outcomes.
@Incorta launches Adaptive Data Foundation for Workday! Finance teams can now sync ERP, CRM, and HRIS data directly into Workday Adaptive Planning with refreshes every 5 minutes—zero IT required.
Share Most FP&A teams don't lack data: they lack the right data, at the right level of detail, at the right time. The data problems are consistent: actuals that arrive after the close, operational plans that never connect to the financial model, and granular detail that's out of reach when analysis demands it. Adaptive Data Foundation supports these three problems in a single, finance- controlled layer - without requiring a pre-existing enterprise data strategy or ongoing IT involvement to maintain.
Finance gets its own governed data layer
Built on Incorta's Direct Data Mapping™ technology, Adaptive Data Foundation includes pre- built blueprints for Workday Financial Management and other enterprise platforms. Unlike enterprise data platforms - which are built and prioritized by IT - Adaptive Data Foundation is owned and operated by finance. FP&A teams can add data feeds, update definitions, and change models on their own timeline, without submitting IT tickets or waiting for backlog clearance.
For organizations that already have a mature data platform, Adaptive Data Foundation runs alongside it. For those that don't it provides a foundation for an enterprise-grade governed layer. See what's happening, and react while it still matters.
With data refreshed as frequently as every five minutes, FP&A teams gain visibility into the operational signals that help drive performance - revenue run rates, pipeline shifts, headcount changes, inventory levels, and spend commitments - before invoices post or the month closes. Scenario analysis and rolling forecasts update as conditions change, giving finance the ability to present options and maintain strategic agility.
When something looks off, teams can drill all the way from a summary variance to the originating transaction without leaving the Adaptive environment or submitting a data request.
“Finance has long been forced to work on someone else’s timeline: waiting on IT for data feeds, waiting on the close for actuals, and waiting on operations for the drivers behind the numbers. The Adaptive Data Foundation changes that rhythm. Finance gets a live, governed planning data layer, business-owned and IT governed, giving teams the ability to reforecast earlier, investigate performance faster, and plan forward instead of simply explaining the past.”
– Mike Nader, VP & Field CTO at Incorta
YES Communities: a real-world look at Incorta + Workday Adaptive Planning in action
YES Communities, one of the largest owners and operators of manufactured housing communities in the US, turned to Workday Adaptive Planning and Incorta to solve a problem familiar to FP&A teams across many industries: data that arrived too late, from too many disconnected systems, to drive real decisions.
With roughly 300 communities and 83,000 homesites across 23 states, the team needed live, governed data flowing into their planning environment - not overnight batch loads and manual reconciliation.
“Workday Adaptive Planning is exceptional at planning and forecasting, but it needs the right data to work from. Incorta provides that foundation: delivering live, governed data from all of our source systems directly into Adaptive. Now the team can pull up any data point from their phone while walking the property, and it's the same trusted data everyone sees. That's what Incorta and Workday Adaptive Planning make possible together - FP&A spending less time on data prep and more time actually partnering with the business."
- Troy Murphy, Director of FP&A, YES Communities
“To lead in the agentic era, finance needs comprehensive access to the operational data that powers accurate AI-driven analysis. By combining Workday Adaptive Planning with Incorta’s live operational data foundation, organizations can unlock the deep insights driving the financial plan, ultimately resulting in faster and more confident business decisions.”
- Ben Pierce, General Manager, Workday Adaptive Planning
The data layer AI-powered planning demands
AI-driven planning and analytics become significantly more capable and trustworthy when the data they reason over is governed, multi-source, current, and complete. With the Adaptive Data Foundation in place, AI-driven variance analysis can surface the operational driver behind a change, not just the number. AI assisted scenario planning can incorporate live signals to generate and continually test forward-looking scenarios.
About Incorta
Incorta is a leading data foundation for decision intelligence. Incorta enables semantic layer intelligence on live, detailed data across all your systems of record through its proprietary Direct Data Mapping® technology. Unlike traditional approaches that fragment data through complex ETL processes, Incorta provides a digital twin of your source systems, delivering real-time, granular intelligence that directly supports decision making. With embedded workflows, AI-powered agents, and prebuilt data applications for Oracle, SAP, Workday, and many others, Incorta closes the gap between curiosity and action—enabling businesses to ask unlimited questions, explore data freely, and act on insights with confidence. For more information, please visit www.incorta.com.
Taking full advantage of the stock market and investing with confidence are common goals for new and old investors, and Zacks Premium offers many different ways to do both.
The popular research service can help you become a smarter, more self-assured investor, giving you access to daily updates of the Zacks Rank and Zacks Industry Rank, the Zacks #1 Rank List, Equity Research reports, and Premium stock screens.
Zacks Premium also includes the Zacks Style Scores.
What are the Zacks Style Scores? Developed alongside the Zacks Rank, the Zacks Style Scores are a group of complementary indicators that help investors pick stocks with the best chances of beating the market over the next 30 days.
Each stock is assigned a rating of A, B, C, D, or F based on their value, growth, and momentum characteristics. Just like in school, an A is better than a B, a B is better than a C, and so on -- that means the better the score, the better chance the stock will outperform.
The Style Scores are broken down into four categories:
Value ScoreValue investors love finding good stocks at good prices, especially before the broader market catches on to a stock's true value. Utilizing ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and many other multiples, the Value Style Score identifies the most attractive and most discounted stocks.
Growth ScoreGrowth investors are more concerned with a stock's future prospects, and the overall financial health and strength of a company. Thus, the Growth Style Score analyzes characteristics like projected and historic earnings, sales, and cash flow to find stocks that will see sustainable growth over time.
Momentum ScoreMomentum investors, who live by the saying "the trend is your friend," are most interested in taking advantage of upward or downward trends in a stock's price or earnings outlook. Utilizing one-week price change and the monthly percentage change in earnings estimates, among other factors, the Momentum Style Score can help determine favorable times to buy high-momentum stocks.
VGM ScoreWhat if you like to use all three types of investing? The VGM Score is a combination of all Style Scores, making it one of the most comprehensive indicators to use with the Zacks Rank. It rates each stock on their combined weighted styles, which helps narrow down the companies with the most attractive value, best growth forecast, and most promising momentum.
How Style Scores Work with the Zacks Rank The Zacks Rank is a proprietary stock-rating model that harnesses the power of earnings estimate revisions, or changes to a company's earnings expectations, to help investors build a successful portfolio.
It's highly successful, with #1 (Strong Buy) stocks producing an unmatched +23.7% average annual return since 1988. That's more than double the S&P 500. But because of the large number of stocks we rate, there are over 200 companies with a Strong Buy rank, plus another 600 with a #2 (Buy) rank, on any given day.
This totals more than 800 top-rated stocks, and it can be overwhelming to try and pick the best stocks for you and your portfolio.
That's where the Style Scores come in.
To have the best chance of big returns, you'll want to always consider stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B, which will give you the highest probability of success. If you're looking at stocks with a #3 (Hold) rank, it's important they have Scores of A or B as well to ensure as much upside potential as possible.
Since the Scores were created to work together with the Zacks Rank, the direction of a stock's earnings estimate revisions should be a key factor when choosing which stocks to buy.
A stock with a #4 (Sell) or #5 (Strong Sell) rating, for instance, even one with Scores of A and B, will still have a declining earnings forecast, and a greater chance its share price will fall too.
Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.
Stock to Watch: Workday (WDAY - Free Report) Founded in 2005 and headquartered in Pleasanton, CA, Workday Inc. (WDAY - Free Report) is a provider of enterprise-level software solutions for financial management and human resource domains. The company’s cloud-based platform combines finance and HR in a single system that makes it easier for organizations to provide analytical insights and decision support.
WDAY is a #2 (Buy) on the Zacks Rank, with a VGM Score of A.
Momentum investors should take note of this Computer and Technology stock. WDAY has a Momentum Style Score of B, and shares are up 6.2% over the past four weeks.
Two analysts revised their earnings estimate upwards in the last 60 days for fiscal 2027. The Zacks Consensus Estimate has increased $0.03 to $10.57 per share. WDAY boasts an average earnings surprise of +7.2%.
With a solid Zacks Rank and top-tier Momentum and VGM Style Scores, WDAY should be on investors' short list.
New Integration Provides Bi-Directional, Zero-Copy Access Between AWS Data and AI Services, and Workday's HR and Finance Data
Workday Data Cloud Capabilities for AWS Customers Coming Soon in Early Access
, /PRNewswire/ -- Workday DevCon — Workday, Inc. (NASDAQ: WDAY), the enterprise AI platform for HR, finance, and IT, today announced that Workday Data Cloud will integrate with Amazon Web Services (AWS). With the new integration, developers have bi-directional zero-copy access to Workday's governed HR and finance data from the AWS tools and AI services they already use, without needing to build custom pipelines, duplicate data, or rebuild business logic from scratch. With this integration, Workday Data Lake, Workday Data Connect, and Workday Live Data Query will be available for AWS customers in early access soon.
Workday Announces Workday Data Cloud Integration with AWS, Giving Developers Direct Access to Workday's Governed Data Layer "When developers build systems that touch people and money, they're wiring AI into high-stakes decisions where there's no room for error," said Gabe Monroy, chief technology officer, Workday. "By integrating Workday Data Cloud with AWS, customers get faster, safer AI built on data they already trust — and developers get to spend their time shipping products instead of on plumbing and permission rewrites."
Workday Data Cloud for AWS Customers
Through the new integration, Workday data will be available alongside the rest of an organization's data on AWS, governed, enriched with business context, and ready for AI workloads.
Developers can point AWS data and AI services, like Amazon Bedrock, directly at Workday's data layer, which carries the business definitions, metric logic, and security context that agents need to return accurate, auditable results. Conversely, this integration enables developers building agents in Workday to now seamlessly access their data from AWS, augmenting decisions and impact within the flow of HR and finance.
Through Workday's Agent Gateway, AI agents built on AWS can securely access Workday payroll, benefits, and financial data with the same governance, permissions, and audit controls already in place for Workday-native agents. Developers can bring agents into production faster without having to rebuild the business logic that Workday already maintains.
"The most impactful AI is built on data that already carries the context of how a business works," said Scott Liska, vice president, strategic accounts at AWS. "This integration with Workday Data Cloud means customers can put their HR and finance data to work across their AI applications on AWS without compromising on governance or speed to production."
The Workday Data Cloud integration with AWS joins existing integrations with Databricks, Google Cloud, Salesforce, and Snowflake to give customers even more ways to securely combine Workday's data with the tools they already use.
Workday Data Cloud Capabilities Now in Early Access
Workday Data Cloud, first announced at Workday Rising in September 2025, is now open to early adopter customers and will be available for AWS customers in early access soon. Developers can now securely connect and analyze HR and finance data in context with customer, market, and operational data. Three capabilities are available in early access, each addressing a different point in how developers work with HR and finance data.
Workday Data Lake provides a curated, unified view of Workday's HR and finance data, blended with third-party sources and layered with the semantic definitions that reflect how an organization actually works. It gives developers a single, trustworthy data foundation rather than raw tables that require manual interpretation.
Workday Data Connect makes that governed data available in the systems where developers already build. Using Apache Iceberg and a growing library of pre-built connectors, including the new AWS integration, it gives developers bi-directional, zero-copy access to Workday data from their preferred cloud and analytics tools, without shadow databases or brittle pipelines.
Workday Live Data Query delivers instant data access for applications and agents that require immediate insights. Developers query Workday directly through SQL via JDBC and Python, getting near real-time access to workforce and financial data. This allows systems to act instantly on what is happening across the business at this moment.
Workday's permission model, business logic, and audit controls travel with the data across all these capabilities. Agents don't have to infer what a metric means or reconstruct who has access to what because that context is part of the data itself. For AI operating on HR and finance decisions, that's the difference between an agent that can be trusted and one that has to be watched.
Availability
Workday Data Connect, Workday Live Data Query, and Workday Data Lake are now available to early adopter customers, with general availability planned for later this year. Workday's integration with AWS is underway, with additional capabilities rolling out through early access programs over the coming quarters.
For More Information
Explore the three paths to build AI apps and agents with Workday, without giving up control or safety. Read how Workday Build is now agent-ready, empowering developers to build, connect, and verify AI agents for HR, finance, and IT. Learn how Agent Passport gives developers verifiable, standards-based control over internal and third-party AI agents. About Workday
Workday operates at the heart of the enterprise – HR, finance, and IT – where the margin for error is effectively zero. By tightly coupling AI with the context, guardrails, and trusted processes that run the business, Workday goes beyond AI that assists work to agents that do the work and drive measurable outcomes. More than 11,500 organizations worldwide, including more than 65% of the Fortune 500, trust Workday to deliver. For more information about Workday, visit workday.com.
Forward-Looking Statements
This press release contains forward-looking statements including, among other things, statements regarding Workday's plans, beliefs, and expectations. These forward-looking statements are based only on currently available information and our current beliefs, expectations, and assumptions. Because forward-looking statements relate to the future, they are subject to inherent risks, uncertainties, assumptions, and changes in circumstances that are difficult to predict and many of which are outside of our control. If the risks materialize, assumptions prove incorrect, or we experience unexpected changes in circumstances, actual results could differ materially from the results implied by these forward-looking statements, and therefore you should not rely on any forward-looking statements. Risks include, but are not limited to, risks described in our filings with the Securities and Exchange Commission ("SEC"), including our most recent report on Form 10-Q or Form 10-K and other reports that we have filed and will file with the SEC from time to time, which could cause actual results to vary from expectations. Workday assumes no obligation to, and does not currently intend to, update any such forward-looking statements after the date of this release, except as required by law.
Any unreleased services, features, or functions referenced in this document, our website, or other press releases or public statements that are not currently available are subject to change at Workday's discretion and may not be delivered as planned or at all. Customers who purchase Workday services should make their purchase decisions based upon services, features, and functions that are currently available.
Agent Passport Measures Every Agent Against Industry Standards Including OWASP LLM Top 10, NIST AI RMF, and MITRE ATLAS
Cisco Joins as Launch Partner to Independently Test AI Agents in Workday Using Cisco AI Defense
, /PRNewswire/ -- Workday DevCon — Workday, Inc. (NASDAQ: WDAY), the enterprise AI platform for HR, finance, and IT, today announced Agent Passport, which tests and verifies every AI agent, Workday-built or third-party, before it goes into production, and continuously monitors it after. Every attestation is tied to a public industry standard, such as OWASP LLM Top 10, NIST AI RMF, and MITRE ATLAS, so security teams have a signed, auditable record of what each agent has been tested for and who did the testing.
Workday Launches Agent Passport to Test, Verify, and Continuously Monitor Every AI Agent in the Enterprise Agent Passport gives companies a verified record that every agent has been tested against the most serious risks before it goes into production, including prompt injection, jailbreak and goal hijacking, system prompt extraction, leaks of employee data, and unsafe outputs. Each test result is tied to a public standard and signed by the partner that performed it, so the record is independent, auditable, and comparable across agents from any vendor.
When an agent attempts to execute a task, Agent Passport will monitor in real time and either allow, block, or route the action accordingly. If a problem is discovered, a single revocation can automatically stop, limit, or otherwise restrict affected agents based on company policy.
"AI agents are now doing the most sensitive work in the enterprise, from onboarding employees to processing payments, and one insecure agent can leak employee data, break compliance, and put the company on the front page for the wrong reasons," said Dean Arnold, vice president, AI Platform, Workday. "Agent Passport gives companies confidence that every agent has been independently tested and verified, and the power to shut any of them down across the business the moment something changes."
A Shared Standard, Built with Industry Leaders
Most platforms that offer agent security testing do it themselves, which means customers receive a "safe" label from the same vendor that built the agent. Workday has built extensive trust with customers with its broad portfolio of AI solutions for HR and finance. The company is building on that trust through open standards and partnership with leading vendors in agentic security and regulatory compliance, so the testing is independent and open, and the results are comparable across agents from any vendor.
Each agent's record has three layers. The first covers the broad areas of trust that Workday defines and keeps current, such as protection against attacks, safe behavior at runtime, and human oversight. The second is a set of specific, testable claims tied to public standards, like resistance to known attack techniques. The third is the signed results from the partner that performed the testing, issued by verified, trusted attestors starting with Cisco.
Because every check is tied to a public standard, security teams can compare agents from different vendors on the same terms for the first time. If two agents carry the same check from two different partners, companies know they were held to the same bar.
Independent Attestations from Industry Leaders in Agentic Security
Cisco is the launch partner for Agent Passport, bringing Cisco AI Defense to independently test AI agents running in Workday against leading security standards before deployment and continuously protect them at runtime against prompt injection, data leakage, jailbreaks and unsafe actions.
Cisco AI Defense confirms the agent resists attempts to override its instructions, keeps its own instructions from being exposed, protects sensitive employee information from leaking, and blocks harmful or policy-violating responses before they reach a user. These validations are important for any agent, but are non-negotiable for agents operating on payroll, benefits, and financial data.
"Agents are going to be everywhere in the enterprise, and that only works if security teams have a clear, signed record of what each one has been tested for," said DJ Sampath, senior vice president and general manager, AI Software and Platform, Cisco. "Cisco AI Defense was built for exactly this kind of validation, and we're excited to partner with Workday to secure the agentic workforce."
Availability
Agent Passport will be available to early access customers in the second half of 2026, and general availability is projected before the end of 2026. The Workday and Cisco partnership is active today, with joint capabilities rolling out over coming quarters.
For More Information
Discover how Workday and Cisco are partnering to define enterprise agentic security. Read how Workday Build is now agent-ready, empowering developers to build, connect, and verify AI agents for HR, finance, and IT. Learn how the latest expansions to Workday Data Cloud allow developers to securely bring live HR and finance data into their existing AI, analytics, and applications without rebuilding data pipelines. Explore the three paths to build AI apps and agents with Workday, without giving up control or safety. About Workday
Workday operates at the heart of the enterprise – HR, finance, and IT – where the margin for error is effectively zero. By tightly coupling AI with the context, guardrails, and trusted processes that run the business, Workday goes beyond AI that assists work to agents that do the work and drive measurable outcomes. More than 11,500 organizations worldwide, including more than 65% of the Fortune 500, trust Workday to deliver. For more information about Workday, visit workday.com.
Forward-Looking Statements
This press release contains forward-looking statements including, among other things, statements regarding Workday's plans, beliefs, and expectations. These forward-looking statements are based only on currently available information and our current beliefs, expectations, and assumptions. Because forward-looking statements relate to the future, they are subject to inherent risks, uncertainties, assumptions, and changes in circumstances that are difficult to predict and many of which are outside of our control. If the risks materialize, assumptions prove incorrect, or we experience unexpected changes in circumstances, actual results could differ materially from the results implied by these forward-looking statements, and therefore you should not rely on any forward-looking statements. Risks include, but are not limited to, risks described in our filings with the Securities and Exchange Commission ("SEC"), including our most recent report on Form 10-Q or Form 10-K and other reports that we have filed and will file with the SEC from time to time, which could cause actual results to vary from expectations. Workday assumes no obligation to, and does not currently intend to, update any such forward-looking statements after the date of this release, except as required by law.
Any unreleased services, features, or functions referenced in this document, our website, or other press releases or public statements that are not currently available are subject to change at Workday's discretion and may not be delivered as planned or at all. Customers who purchase Workday services should make their purchase decisions based upon services, features, and functions that are currently available.
Developer Agent Lets Developers Build AI Apps and Agents on Workday Using Natural Language in Agentic Tools Like Claude Code, Cline, Codex, Cursor, and Google Antigravity
Agent-Ready Tools Enable Customer-Built and Third-Party Agents to Safely Act on HR and Finance Data from Any Surface
Agent Passport Tests, Verifies, and Continuously Monitors Every AI Agent in Workday Against Public Standards Like OWASP LLM Top 10, NIST AI RMF, and MITRE ATLAS
, /PRNewswire/ -- Workday DevCon — Workday, Inc. (NASDAQ: WDAY), the enterprise AI platform for HR, finance, and IT, today unveiled new agentic capabilities in Workday Build, its platform for developers to build custom AI apps and agents that run on Workday. The new capabilities include Developer Agent, which lets developers build AI apps and agents in plain language from the agentic tools they already use; Agent-Ready Tools, which provide controlled guardrails for agents to access HR and finance data over Model Context Protocol (MCP); and Agent Passport, which gives agents digital stamps from trusted security and compliance vendors to verify they are safe to deploy.
Workday Launches New Tools for Developers to Build, Connect, and Verify AI Agents For HR, Finance, and IT. Today's agent development tools help developers write code faster, but they lack the big picture ability to ensure data is correct, secure, and in line with company rules. One mistake in payroll, benefits, or the company ledger can mean a missed paycheck, exposed employee data, or a fine from a regulator. Developers need tools that enable them to move quickly without breaking the safeguards they already trust. New capabilities in Workday Build close that gap.
"Platforms win when they make the hard thing disappear for the developer," said Gabe Monroy, chief technology officer, Workday. "Anyone can give an agent speed, the hard part is letting it act on the org chart or ledger and trusting every step – and that's the part that Workday Build makes disappear."
Developer Agent: From Prompt to Production in Minutes
The Developer Agent is designed to fit into how developers already work today. Instead of forcing teams into a new interface, it plugs into the agentic development tools they already use, including Claude Code, Cline, Codex, Cursor, and Google Antigravity. Developers can also leverage Developer Agent to build and deploy custom agents for their company that run on the Workday platform using the open AgentSkills standard (Skills.md).
For example, a developer can type a request like, "Build an agent that alerts finance when a department is trending to go over budget this quarter." Developer Agent then picks the right Workday Agent-Ready Tools, connects the necessary data and services, and pulls in the documentation and examples needed, so work that used to take days of setup can be done in minutes.
"Agentic AI has permanently rewritten the developer playbook, shifting the focus from writing code to scaling impact," said Jay Wieczorkowski, general manager, Developer Platform, Workday. "Developer Agent brings the power and trust of Workday Build to the agentic tools developers love, fast-tracking development so they can focus on something bigger: transforming the way the world works."
What the Workday Developer Community is Saying
"As the only developer at Waste Connections, the Developer Agent will give me a real starting point to build agents on top of my existing Extend apps, handling the technical work so I can build cool, creative apps and agents while still learning," said Jules Mayberry, Workday developer, Waste Connections. "That means more time with stakeholders to actually understand what the business needs."
"Developer Agent is an important advancement that enables us to co-create knowledge‑encoded agents and reusable agent skills with our clients, turning expertise into action and business value," said Bharath Srinivas, chief technology officer, Workday Business Group, Accenture. "It allows us to embed real-world process intelligence directly into agent skills, governed by people who understand the business. Beyond productivity gains, it represents a structural shift in how value is delivered."
"Every developer I talk to feels the pressure to build agentic automation faster," said Holger Mueller, vice president and principal analyst, Constellation Research. "Workday's new Developer Agent provides the choice – bring your own tooling, build in the Developer Agent, or even use Sana Agents for an even broader scope of agentic AI. Workday is the only enterprise platform vendor giving developers these three choices to achieve developer velocity in the agentic AI era."
Agent-Ready Tools: Powering Agents to Act Safely on Workday Data
Once an AI agent is built, it needs a safe way to take action, like looking up a record, updating a benefit, or triggering an approval. Workday's new Agent-Ready Tools are a new class of enterprise connectors built specifically for autonomous agents.
Unlike traditional APIs designed for data integrations, Agent-Ready Tools are purpose-built to power agents, providing agents with precise, easy-to-navigate business logic and context while reducing hallucination and latency. Hundreds of Agent-Ready Tools that act across all of Workday connect through open standards like MCP, and agents automatically inherit Workday's security and delegation model, business process controls, and audit trail.
When agents need to act beyond Workday, developers can build custom agent actions from a library of thousands of pre-built Pipedream connectors, and expose them to their agents as Agent-Ready Tools.
Agent Passport: Independent, Third‑Party Verification That An Agent is Safe to Run
When the agent is ready to act, Agent Passport validates its safety and compliance before it goes live. With standards-based stamps that show which security and compliance tests the agent has passed, who verified them, and which standards were used, companies can continuously monitor and govern every internal or third-party AI agent in Workday with confidence.
Cisco is the first attestation partner to power the stamps that appear in Agent Passport, providing independent, third-party verification that an agent meets open and industry recognized security and compliance standards.
Together, the new Developer Agent, Agent‑Ready Tools, and Agent Passport give customers a faster, safer way to bring AI into their most important HR and finance decisions, with the same trust they expect from Workday.
Availability
Developer Agent and Agent-Ready Tools are now available to early access customers through Workday Extend Professional, and general availability is projected in the second half of 2026. Agent Passport will be available to early access customers in the second half of 2026, and general availability is projected before the end of 2026.
For More Information
Explore the three paths to build AI apps and agents with Workday, without giving up control or safety. Read how Agent Passport gives developers a verifiable way to confidently govern both internal and third-party AI agents. Learn how the latest expansions to Workday Data Cloud allow developers to securely bring live HR and finance data into their existing AI, analytics, and applications without rebuilding data pipelines. About Workday
Workday operates at the heart of the enterprise – HR, finance, and IT – where the margin for error is effectively zero. By tightly coupling AI with the context, guardrails, and trusted processes that run the business, Workday goes beyond AI that assists work to agents that do the work and drive measurable outcomes. More than 11,500 organizations worldwide, including more than 65% of the Fortune 500, trust Workday to deliver. For more information about Workday, visit workday.com.
Forward-Looking Statements
This press release contains forward-looking statements including, among other things, statements regarding Workday's plans, beliefs, and expectations. These forward-looking statements are based only on currently available information and our current beliefs, expectations, and assumptions. Because forward-looking statements relate to the future, they are subject to inherent risks, uncertainties, assumptions, and changes in circumstances that are difficult to predict and many of which are outside of our control. If the risks materialize, assumptions prove incorrect, or we experience unexpected changes in circumstances, actual results could differ materially from the results implied by these forward-looking statements, and therefore you should not rely on any forward-looking statements. Risks include, but are not limited to, risks described in our filings with the Securities and Exchange Commission ("SEC"), including our most recent report on Form 10-Q or Form 10-K and other reports that we have filed and will file with the SEC from time to time, which could cause actual results to vary from expectations. Workday assumes no obligation to, and does not currently intend to, update any such forward-looking statements after the date of this release, except as required by law.
Any unreleased services, features, or functions referenced in this document, our website, or other press releases or public statements that are not currently available are subject to change at Workday's discretion and may not be delivered as planned or at all. Customers who purchase Workday services should make their purchase decisions based upon services, features, and functions that are currently available.
It doesn't matter your age or experience: taking full advantage of the stock market and investing with confidence are common goals for all investors. Luckily, Zacks Premium offers several different ways to do both.
Featuring daily updates of the Zacks Rank and Zacks Industry Rank, full access to the Zacks #1 Rank List, Equity Research reports, and Premium stock screens, the research service can help you become a smarter, more self-assured investor.
It also includes access to the Zacks Style Scores.
What are the Zacks Style Scores? The Zacks Style Scores, developed alongside the Zacks Rank, are complementary indicators that rate stocks based on three widely-followed investing methodologies; they also help investors pick stocks with the best chances of beating the market over the next 30 days.
Each stock is given an alphabetic rating of A, B, C, D or F based on their value, growth, and momentum qualities. With this system, an A is better than a B, a B is better than a C, and so on, meaning the better the score, the better chance the stock will outperform.
The Style Scores are broken down into four categories:
Value ScoreFor value investors, it's all about finding good stocks at good prices, and discovering which companies are trading under their true value before the broader market catches on. The Value Style Score utilizes ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and a host of other multiples to help pick out the most attractive and discounted stocks.
Growth ScoreGrowth investors, on the other hand, are more concerned with a company's financial strength and health, and its future outlook. The Growth Style Score examines things like projected and historic earnings, sales, and cash flow to find stocks that will experience sustainable growth over time.
Momentum ScoreMomentum investors, who live by the saying "the trend is your friend," are most interested in taking advantage of upward or downward trends in a stock's price or earnings outlook. Utilizing one-week price change and the monthly percentage change in earnings estimates, among other factors, the Momentum Style Score can help determine favorable times to buy high-momentum stocks.
VGM ScoreIf you want a combination of all three Style Scores, then the VGM Score will be your friend. It rates each stock on their combined weighted styles, helping you find the companies with the most attractive value, best growth forecast, and most promising momentum. It's also one of the best indicators to use with the Zacks Rank.
How Style Scores Work with the Zacks Rank The Zacks Rank, which is a proprietary stock-rating model, employs earnings estimate revisions, or changes to a company's earnings expectations, to make building a winning portfolio easier.
It's highly successful, with #1 (Strong Buy) stocks producing an unmatched +23.7% average annual return since 1988. That's more than double the S&P 500. But because of the large number of stocks we rate, there are over 200 companies with a Strong Buy rank, plus another 600 with a #2 (Buy) rank, on any given day.
But it can feel overwhelming to pick the right stocks for you and your investing goals with over 800 top-rated stocks to choose from.
That's where the Style Scores come in.
To have the best chance of big returns, you'll want to always consider stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B, which will give you the highest probability of success. If you're looking at stocks with a #3 (Hold) rank, it's important they have Scores of A or B as well to ensure as much upside potential as possible.
Since the Scores were created to work together with the Zacks Rank, the direction of a stock's earnings estimate revisions should be a key factor when choosing which stocks to buy.
For instance, a stock with a #4 (Sell) or #5 (Strong Sell) rating, even one that boasts Scores of A and B, still has a downward-trending earnings forecast, and a much greater likelihood its share price will decline as well.
Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.
Stock to Watch: Workday (WDAY - Free Report) Founded in 2005 and headquartered in Pleasanton, CA, Workday Inc. (WDAY - Free Report) is a provider of enterprise-level software solutions for financial management and human resource domains. The company’s cloud-based platform combines finance and HR in a single system that makes it easier for organizations to provide analytical insights and decision support.
WDAY is a #3 (Hold) on the Zacks Rank, with a VGM Score of A.
Additionally, the company could be a top pick for growth investors. WDAY has a Growth Style Score of A, forecasting year-over-year earnings growth of 16.8% for the current fiscal year.
Eight analysts revised their earnings estimate upwards in the last 60 days for fiscal 2027. The Zacks Consensus Estimate has increased $0.21 to $10.78 per share. WDAY boasts an average earnings surprise of +7.2%.
With a solid Zacks Rank and top-tier Growth and VGM Style Scores, WDAY should be on investors' short list.
CHATTANOOGA, Tenn., June 09, 2026 (GLOBE NEWSWIRE) -- Syssero, a Rotation Digital company and consulting firm dedicated to helping organizations maximize their Workday investment, today announced it has been named a Workday Deployment Partner. This partnership expands Syssero’s role within the Workday partner ecosystem and enables the company to support organizations through new Workday deployments, rollouts, and post-production services, including application management services (AMS).
As a 10+ year Workday partner, Syssero brings deep experience supporting organizations across the Workday lifecycle, from implementation strategy to ongoing optimization and innovation. The Deployment Partner designation expands Syssero’s ability to support customers through both new Workday deployments and post-production application management services (AMS), reinforcing its mission to empower organizations with practical guidance informed by a team that includes many former Workday users.
Through its partnership with Workday, Syssero will deliver services that help organizations deploy, manage, and evolve their Workday environments, including:
Support new Workday deployments and rollouts across finance and HRDeliver post-production services and application management services (AMS) to help customers continuously optimize their environmentsProvide implementation advisory and strategic guidance to accelerate time to value and drive adoptionExtend Workday capabilities through innovation and solutions developed within the Workday ecosystem “Being named a Workday Deployment Partner is an exciting milestone for Syssero,” said Amber Lowry, co-founder and president of the Syssero business unit. “Our mission has always been to empower organizations to take ownership of their Workday environments. This designation allows us to expand the ways we support customers, from new deployments to long-term optimization, while continuing to deliver the practical solutions and innovation our clients expect.”
Workday Financial Management and Workday Human Capital Management (HCM) support a full range of financial and people-based processes that help provide real-time operational visibility along with the speed and agility to adapt to business growth and change.
About Syssero
Syssero is a Workday consulting firm that helps organizations deploy, optimize, and extend their Workday environments. Through a combination of deployment support, implementation advisory, and post-production services, including application management services (AMS), Syssero empowers customers to take ownership of their technology while achieving long-term operational success.
Syssero operates as part of Rotation Digital, a collective of specialized consulting and technology companies focused on delivering innovative enterprise solutions and helping organizations accelerate digital transformation.
Hewlett Packard Enterprise (HPE +2.93%) and Dell Technologies (DELL +1.05%) are booming amid the AI infrastructure-building spree. Both are experiencing explosive growth, but which stock is the better long-term pick right now? Let's have a look.
HPE's network skyrockets HPE just reported a record Q2, with revenue reaching $10.7 billion, and its EPS beat estimates by $0.79. Revenue grew 40% year over year. Specifically, networking revenue grew by over 148%, and the Cloud and AI segment increased 23%.
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HPE raised its full fiscal 2026 revenue growth range to 29% to 33%, a huge bump from the 17% to 22% outlook from the previous quarter. Shares of HPE are up almost 124% this year as of this writing.
Dell exceeds all expectations HPE's quarterly numbers were excellent, but Dell's were jaw-dropping. AI server revenue grew an astounding 757% year over year, reaching $16.1 billion. Total revenue increased 88% year over year. The company blew past Wall Street expectations for EPS, reporting earnings of $4.86, well above the $2.94 consensus.
Dell's share price is up more than 234% year to date as of this writing.
Image source: Getty Images.
Because of Dell's skyrocketing stock price, the company's valuation metrics are now quite high. HPE is also trading with higher metrics, but Dell has a higher forward and trailing price-to-earnings (P/E) ratio, price-to-sales ratio, and enterprise value to EBITDA.
Who we choose as the winner is a nuanced decision. Dell is a higher-risk, higher-reward stock than HPE. Dell is benefiting from historic AI revenue acceleration, whereas HPE is a steadier and more diversified business. At the same time, HPE offers improving margins and a cheaper valuation.
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If you're an aggressive investor with a risk appetite, Dell is a solid choice based on the company's momentum. For those who don't want to be quite as aggressive, HPE's stock is compelling in a red-hot market with frothy valuations, thanks to its more down-to-earth pricing.
Ultimately, the stock you choose depends on your personal risk profile, but both HPE and Dell are winners in the AI infrastructure boom.
Catie Hogan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Hewlett Packard Enterprise. The Motley Fool has a disclosure policy.
Dell (DELL +1.05%) is no longer just a server and personal computer (PC) company. A historic surge in demand for hardware to power artificial intelligence (AI) has sent the stock soaring. It has nearly tripled over the past 12 months.
The demand driving the rally has been impressive. In the first quarter, Dell reported AI-optimized server revenue of $16 billion, up from less than $2 billion last year. The company now sits on an AI server backlog of $51.3 billion and has raised its full-year revenue guidance for the category to approximately $60 billion.
The market has responded by revaluing Dell from a mature PC vendor to a core AI infrastructure play. With the new valuation comes higher expectations, particularly along the bottom line. For the new valuation to hold, Dell will have to prove it can convert those orders into reliable earnings growth.
Image source: Getty Images.
A backlog built on AI Dell's transformation is driven by its ability to capture a significant share of the enterprise AI build-out. The company booked $24 billion in AI server orders this quarter as its customer base broadened to more than 5,000.
Dell is leveraging its core strengths to win these deals. Its scale and integrated portfolio allow it to design and deploy entire AI factories for large enterprises, neoclouds, and government clients.
The company's supply chain, which combines its own manufacturing with a network of contract partners, helps it respond to demand shifts and secure critical components, like graphics processing units (GPUs), in a supply-constrained market. This end-to-end capability reduces complexity and procurement costs for customers.
The results are showing up in the company's infrastructure solutions group (ISG), which houses the server and storage business. This segment now generates over 80% of Dell's total operating income, with margins of 11.7%, making it the clear profit engine of the company.
The AI wave is also beginning to fuel growth in Dell's traditional server business as companies upgrade their entire IT stacks to support growing workloads. Meanwhile, the commercial PC refresh cycle is underway, helping lift profitability at Dell's client solutions group segment. This combination provides another growth avenue while generating reliable cash flow for the company.
The high cost of growth While the ISG's overall profitability is healthy, the mix of revenue within the segment is changing in a way that pressures margins. The AI-optimized servers driving the growth carry significantly lower margins than Dell's traditional enterprise hardware.
Management is targeting mid-single-digit operating margins for its AI servers compared to the ISG segment's average of around 12%. As these lower-margin systems become a larger portion of sales, they create a structural drag on the company's overall profitability.
The effect showed up last year as Dell's consolidated gross margin compressed by 220 basis points, falling to 20%, as AI hardware became a larger part of total sales. This pattern continued in Q1, with gross margins down 330 basis points to 17.8%.
The company is attempting to offset this by increasing attach rates of higher-margin storage and services, but the margin pressure is expected to continue. In a cyclical hardware business facing margin headwinds, any delays that could slow revenue growth, such as memory and GPU bottlenecks, will also weigh on earnings growth.
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Management raised full-year guidance. It's now expecting earnings growth of 74% to nearly $18 per share. After the company released its blowout Q1 report, the stock rose about 37%. With shares trading at roughly 24 times this year's earnings estimates compared to its five-year average of around 9.5 times, it may be wise for investors to let the dust settle a bit.
Key Takeaways Dell ISG revenues surged 181% year over year to $29B, while total revenues rose 88% to $43.8B.Dell expands AI Factory via NVIDIA, Google Cloud and others to integrate AI across the stack.Dell AI server revenues hit $16.1B; expects about $60B in fiscal 2027. Dell Technologies (DELL - Free Report) is benefiting significantly from its robust partner network, which has been a key driver of growth in its Infrastructure Solutions Group (“ISG”). In the first quarter of fiscal 2027, ISG revenues surged 181% year over year to a record $29 billion, while total revenues rose 88% to $43.8 billion. The company continues to strengthen the Dell AI Factory through collaborations with NVIDIA, Google Cloud, OpenAI, xAI, ServiceNow, Palantir, Mistral and CrowdStrike, enabling integrated AI solutions across compute, storage, networking, software and services.
A key catalyst is Dell’s growing partnership with NVIDIA. The newly announced PowerEdge R9822 and M9822 servers powered by NVIDIA Vera CPUs expand the Dell AI Factory portfolio and support agentic AI workloads, including data processing, retrieval, orchestration and runtime operations. Dell also enhanced support for NVIDIA networking, AI software, digital twins and robotics technologies, further strengthening its end-to-end AI infrastructure offerings.
Dell recently became the first company to ship NVIDIA Vera Rubin-based systems to CoreWeave. Its PowerRack platform, powered by NVIDIA Vera Rubin NVL72, delivers up to 10 times lower AI inference cost per token than previous-generation systems, improving the economics of large-scale agentic AI deployments.
The company’s AI server business has been a key catalyst. AI-optimized server revenues reached $16.1 billion during the fiscal first quarter, and Dell expects approximately $60 billion in AI server revenues for fiscal 2027. The company’s AI customer base now exceeds 5,000 organizations across enterprise, sovereign and neocloud markets.
Dell Technologies’ innovative portfolio, expanding partner base and increasing AI footprint are significant growth drivers. For the second quarter of fiscal 2027, Dell expects revenues between $44 billion and $45 billion, up roughly 50% at the midpoint of $44.5 billion. ISG is expected to grow roughly 75%, supported by $15.5 billion in AI server revenues.
Dell’s AI Infrastructure Push Faces Tough RivalsDell Technologies is a major player in the AI infrastructure market but faces stiff competition from Super Micro Computer (SMCI - Free Report) and Hewlett Packard Enterprise (HPE - Free Report) .
Super Micro Computer is strengthening its AI infrastructure business through its Data Center Building Block Solutions (“DCBBS”), which provides end-to-end data center solutions, including liquid cooling, networking, power systems, software and services. The company highlighted its industry-leading time-to-online capabilities, helping customers deploy AI factories faster and more efficiently. Strong engineering expertise, design-for-manufacturing initiatives and factory automation are improving production speed, quality and margins. Super Micro Computer continues to expand partnerships with NVIDIA, AMD, Intel and Arm while increasing manufacturing capacity globally. Management believes DCBBS, software and services will become significant profit drivers as demand for AI infrastructure continues to grow.
HPE is benefiting from strong AI and networking demand, with AI systems orders reaching $1.8 billion and expanding into orchestration, data movement and agentic AI workloads. Record backlog and a pipeline multiple times larger than the backlog support growth visibility. HPE is seeing rising demand for high-memory servers and AI inference, while the Juniper integration is driving networking momentum and cross-selling opportunities. Management expects durable demand, sustained AI adoption and continued growth across its Cloud & AI and Networking businesses through fiscal 2027.
DELL’s Share Price Performance, Valuation & EstimatesShares of Dell have gained 213.3% year to date, outperforming the broader Computer & Technology sector and the Zacks Computer - Micro Computers industry’s growth of 16.1% and 17.2%, respectively.
DELL’s YTD Price Performance
Image Source: Zacks Investment Research
From a valuation standpoint, its forward price-to-earnings ratio of 26.25 is significantly below the industry’s average of 32.4.
DELL’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for fiscal 2027 earnings is pegged at $14.54 per share, increasing 9.9% over the past 30 days. This suggests 41.17% year-over-year growth.
DELL currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of Dell Technologies (NYSE:DELL | DELL Price Prediction) and Hewlett Packard Enterprise (NYSE:HPE) are gaining attention as both names extending a torrid one-month run powered by AI-server demand. DELL stock is up 54% over the past month, while HPE stock has rallied 59% over the same window.
Dell shares were last changing hands near $398, building on a powerful year that has lifted the stock 252% over the trailing 12 months. HPE stock is trading around $50, with a one-year gain of 176%.
Both moves trace back to back-to-back blowout earnings reports and raised guidance that reframed the AI-hardware narrative for the rest of 2026. The market is now treating Dell and HPE as direct, scaled beneficiaries of hyperscaler and enterprise AI capex.
AI Server Demand Fuels the Rally Dell set the tone on May 28 with fiscal Q1 2027 results that smashed expectations. Revenue came in at $43.84 billion, up 88% year over year, with non-GAAP diluted EPS of $4.86 versus a $2.96 consensus.
AI-optimized server revenue for Dell jumped to $16.13 billion, up 757%, and Dell booked $24.4 billion in AI orders during the quarter. Management raised its full-year FY27 revenue guidance to $165 billion to $169 billion and now expects roughly $60 billion of AI-server revenue this year.
HPE followed on June 1 with its own beat. The company’s Q2 FY26 revenue rose 40% to $10.68 billion, with non-GAAP diluted EPS of $0.79 well above the company’s own $0.51 to $0.55 guide. HPE’s networking segment, lifted by the Juniper Networks integration, surged 148%, and the company’s server revenue grew 33%.
Peers Ride the Same Wave CEO Antonio Neri framed the HPE quarter with confidence, stating, “HPE delivered an exceptional quarter with record-breaking revenue, higher-than-anticipated profitability, and increased free cash flow, reflecting strong execution and healthy demand across the business.” Management lifted FY26 revenue growth guidance to 29% to 33% and now expects free cash flow of at least $3.5 billion.
The setup mirrors the broader AI-infrastructure cohort, where NVIDIA (NASDAQ:NVDA) silicon and Super Micro Computer (NASDAQ:SMCI) systems sit alongside Dell and HPE racks inside hyperscaler builds. Retail enthusiasm has tracked the fundamentals, with Reddit sentiment for DELL peaking at 85 after earnings and HPE sentiment hitting 90 on June 5.
That said, vertical moves of this size invite volatility. AI-hardware names can swing hard on capex commentary or hyperscaler order timing, and DELL shares are no exception even as the monthly chart keeps climbing.
What to Watch Next The forward catalysts are well defined. Dell’s next earnings report is expected in late August, with HPE’s Q3 FY26 release slated for early September. Any hyperscaler capex updates between now and then could move both names in tandem.
For investors, the key question is whether AI-server order velocity holds. Dell’s guidance implies AI-server revenue growth of 144% for FY27, and HPE’s networking ramp suggests the Juniper integration is pulling forward, not slowing. The structural demand story is intact, but position sizing matters after a run of this magnitude.
For DELL and HPE shareholders, the prudent approach is to respect both the trend and the volatility profile. Traders should watch their stop levels into the close, and longer-term holders may want to consider whether their AI-infrastructure exposure has quietly become outsized after the monthly surge.
The broad stock market is really taking things into overdrive, and that’s thanks primarily to the new class of heavy-lifters referred to by Ben Emons as the “Parabolic 7.” Indeed, it’s a fitting name for the new leadership group leading tech and the indices higher.
But that’s not to say investors should neglect the Magnificent Seven stocks, which, I think, represent a fantastic value at current levels after appreciating less than the S&P 500, at least on a year-to-date basis. As Pershing Square‘s (NYSE:PS) Bill Ackman puts it, there are some high-quality stocks, especially the subset of the Mag Seven in which Mr. Ackman has been buying, that are cheap right now.
In any case, the Mag Seven is less than magnificent these days, but potentially rich with value. For momentum seekers who aren’t unsettled by parabolas in charts, it’s the Parabolic Seven names that might be more than worth keeping tabs on as they act as a playground for traders and AI investors who don’t think the AI-driven supercycle in semiconductors is over quite yet.
Who are the Parabolic Seven? And are they still worth buying? The Parabolic Seven consists of Micron (NASDAQ:MU | MU Price Prediction), SanDisk (NASDAQ:SNDK), Advanced Micro Devices (NASDAQ:AMD), Dell Technologies (NASDAQ:DELL), Marvell (NASDAQ:MRVL), Intel (NASDAQ:INTC), and Broadcom (NASDAQ:AVGO).
These seven parabolic movers are up 200%, 496%, 120%, 213%, 223%, 180%, and 14% (note Broadcom shares 18% plunged after a tough post-quarter reaction). With the exception of Broadcom, the names seem way too hot to handle, even as sell-side analysts keep raising their year-ahead price targets.
Either way, what’s most remarkable, at least in my opinion, is that some of the price-to-earnings (P/E) metrics aren’t as inflated as you’d think. Indeed, there’s a lot of real earnings growth going on, but the big question mark is whether the supercycle going on right now will lead to a cyclical bust that’s just as “super” at some point down the road.
A name like Dell Technologies seems more tame with a 31.4 times trailing P/E multiple. In numerous prior pieces, I’ve praised the firm as an underappreciated play on AI servers. And while the secret is now out, I still think the name is most palatable of the Parabolic Seven cohort.
Wait, where was Nvidia? A stark omission, as I’m sure you’ve probably recognized, is the great Nvidia (NASDAQ:NVDA). It’s not because it’s not a magnificent company or a dominant behemoth in AI chips, especially after the curtain pulled on the RTX Spark line of chips. It’s simply because the stock has not been all that hot year to date, gaining just 10.5% — a return that comes up short of the Nasdaq 100’s 16.7% YTD gain.
Perhaps it’s because Nvidia has seen its shares taper off a bit, at least when you look at the longer-term chart, that the name is a worthy addition to the portfolio. After exhibiting a bit of volatility in the past couple of months, the stock goes for just 31.9 times trailing P/E, making it a relative bargain when you consider Nvidia chips just keep flying off the shelves.
And as the firm targets new growth categories, the company genuinely stands out as having what it takes to adapt and thrive as investors start viewing the AI trade as about more than just chips. It’s all about Jensen Huang’s five-layer cake. And though a plunge in the Parabolic Seven could drag the rest of semis, including Nvidia stock, down with it, I would treat Nvidia stock as a magnificent buy candidate on any dip that comes our way.
Beware of parabolic movers As Michael Burry bets against semis (by means of the iShares Semiconductor ETF (NASDAQ:SOXX), which includes the Parabolic Seven names) while cautioning from chasing such parabolic moves, perhaps it’s wise to enjoy the Parabolic Seven from the sidelines, at least until the next big correction hits.
Maybe it started Friday, or maybe not, but either way, I think there’s more to the market than just the parabolic movers in the semis. In fact, I think there’s value in high-quality names that have suddenly found themselves in the shadow of the Parabolic Seven. Most notably, Nvidia and the rest of the Mag Seven.
Shares of Super Micro Computer (NASDAQ:SMCI | SMCI Price Prediction) are down 11% at midday Tuesday, while Dell Technologies (NYSE:DELL) is sliding 9%. Both high-beta AI hardware names are getting hit in a coordinated risk-off move across the AI infrastructure complex.
The selling comes as the broader market also weakens, with the S&P 500 ETF down 1.5% to 2% on the session. This suggests a meaningful uptick in nervousness, though it’s hasty to declare an outright panic.
The setup is classic for high-beta names. After enormous run-ups, even a modest volatility spike can trigger heavy deleveraging. Today, Super Micro Computer and Dell are the poster children for that dynamic.
Rotation Out of High-Beta AI Hardware There’s no single confirmed catalyst behind the SMCI and DELL declines. Investors appear to be rotating out of high-beta tech and AI-hardware names amid broad market volatility and concerns over the economic impact of ongoing geopolitical conflict. Other semiconductor and AI infrastructure stocks are also lower.
Super Micro Computer carries its own overhang. The company reported revenue up 123% year over year in its most recent quarter, but Q3 sales missed consensus and the board is still working through an independent review tied to export-control matters. With a beta of 1.87, SMCI stock tends to amplify any market drawdown.
Dell’s situation is different. The company posted a blowout Q1 FY2027 print on May 28, with AI-optimized server revenue jumping 757% year over year to $16.13 billion and full-year guidance raised meaningfully. Yet DELL stock is selling off anyway, which indicates that today’s move is about positioning and order flow rather than fundamentals.
Dell’s Sharp Reversal Shows the Volatility The Dell reversal is the most striking part of the tape. Heading into today, DELL stock was up 54% over the prior month, riding the AI server demand wave. The reversal illustrates how quickly the momentum can flip in these names.
Super Micro Computer stock had its own surge into today, climbing 24% over the past month before this pullback. Clearly, big up moves can produce big down days.
Sentiment is genuinely split. Short-term traders are reacting to technical weakness and the liquidity pull out of crowded longs. Longer-term holders point to Super Micro’s and Dell’s central roles in the NVIDIA (NASDAQ:NVDA) led AI server buildout, where Dell guided full-year FY27 revenue to approximately $60 billion in AI servers.
Peers Feel the Same Pressure Hewlett Packard Enterprise (NYSE:HPE) and other AI infrastructure peers are also under pressure today, consistent with a sector rotation rather than a Dell- or SMCI-specific story. The fact that DELL stock is selling off despite recently raised guidance reinforces that read.
The valuation context matters here. SMCI stock trades at a forward earnings multiple of 13x, while DELL stock trades at 21x forward earnings. Analyst consensus targets sit at $37.62 on SMCI and $483.83 on Dell, though several Wall Street estimates predate today’s drop.
What to Watch Into the Close The key question is whether the selling pressure intensifies in the coming days or fades as volatility ebbs. So far, this looks like selective deleveraging rather than systemic stress, but high-beta names can stay choppy for several sessions after a flush like this.
Investors may want to watch how SMCI stock and DELL stock behave on any rebound attempt later today and throughout the week. Follow-through selling would suggest that the rotation has more to run, while a sharp snapback could indicate that today’s move was largely mechanical. Either way, position sizing in these names matters more than ever given the volatility on display.
