CHSCP

We rate CHS INC (CHSCP) as a Reduce with a composite score of 43.0/100 at a current price of $27.96. The quantitative profile shows weakness across multiple dimensions, suggesting limited upside potential and elevated risk of underperformance relative to peers over the next 12 months.

The rating is primarily driven by strength in stability (99th percentile) and momentum (42th percentile), which together account for the majority of the composite score. Offsetting weakness in quality (22th percentile) and value (25th percentile) tempers our overall conviction. We assign a No Moat rating (34/100), Low uncertainty, and Standard capital allocation.

Key items to watch: valuation compression risk if growth disappoints. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

CHS INC holds a top-quartile position (#0 of 50) within the Wholesale Trade sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 43.0/100 places it at rank #3127 in our full 7,333-stock universe. At N/A in market capitalization, CHS INC is a small-cap player in the Wholesale Trade space, which limits certain scale advantages but may allow for more agile strategic execution.

Revenue contraction of -8% combined with momentum at the 42th percentile paints a cautious picture of the near-term business outlook. The market appears to be pricing in continued challenges, and a catalyst for reversal is not clearly visible from current data.

The margin cascade tells an important story: gross margins of 3% (-19.2pp vs sector) narrow to operating margins of 0% (-2.9pp vs sector) and net margins of 1.7%, yielding a gross-to-net conversion rate of 53%. This efficient conversion suggests well-controlled operating costs and limited margin leakage between the gross and net levels.

At a current price of $27.96, CHS INC is trading at a premium to fundamental value. Our value factor score of 25/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The premium valuation implies the market is pricing in significant future growth or quality improvements that are not yet fully reflected in current fundamentals.

Valuation multiples are not available for this company, which limits our ability to assess relative pricing. We rely more heavily on factor-based valuation signals in such cases.

We assign a Low uncertainty rating to CHS INC. The company exhibits strong financial stability with a beta of 0.07, conservative leverage (33% D/E), and a stability factor in the 99th percentile. The predictable nature of the business model and solid financial position reduce the range of potential outcomes, giving us confidence in our fair value estimate.

Specific risk factors that inform our assessment include: weak quality scores (22th percentile); low beta of 0.07 — while defensive, this may indicate limited upside participation in bull markets. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 99th percentile and quality factor at the 22th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: above-average stability (99th percentile) suggests predictable business dynamics; a 7.34% dividend yield anchors total return. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate CHS INC's capital allocation as Standard. Management has shown adequate — though not exceptional — stewardship of shareholder capital. Returns on equity stand at 5.9%, and the balance sheet is managed within acceptable parameters (D/E: 33%). Exemplary allocators typically sustain ROE above 20% and D/E below 50%; CHS INC falls short on at least one dimension.

There is room for improvement in optimizing the capital structure or enhancing shareholder returns. The 7.34% dividend yield provides some income return, but the overall capital allocation framework would benefit from either higher reinvestment returns, improved balance sheet efficiency, or increased shareholder distributions. We will monitor for signs of strategic improvement that could warrant an upgrade.

In summary, CHS INC receives a Reduce rating with a composite score of 43.0/100 (rank #3127 of 7,333). Our quantitative framework assigns a No Moat (34/100, trend: stable), Low uncertainty, and Standard capital allocation. The average factor score across quality, value, momentum, stability, and investment is 44/100.

Our analysis does not support a constructive view on CHS INC at this time. The combination of limited competitive advantages, low uncertainty, and standard capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.