What Does Norfolk Southern Corporation's (NYSE:NSC) Share Price Indicate?

Published
July 22, 2022
NYSE:NSC
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Let's talk about the popular Norfolk Southern Corporation (NYSE:NSC). The company's shares received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$270 at one point, and dropping to the lows of US$221. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Norfolk Southern's current trading price of US$242 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Norfolk Southern’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Norfolk Southern

Is Norfolk Southern still cheap?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 14% below my intrinsic value, which means if you buy Norfolk Southern today, you’d be paying a reasonable price for it. And if you believe the company’s true value is $281.68, then there isn’t much room for the share price grow beyond what it’s currently trading. Although, there may be an opportunity to buy in the future. This is because Norfolk Southern’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What does the future of Norfolk Southern look like?

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NYSE:NSC Earnings and Revenue Growth July 22nd 2022

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by 22% over the next couple of years, the future seems bright for Norfolk Southern. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? NSC’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

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

If you want to dive deeper into Norfolk Southern, you'd also look into what risks it is currently facing. You'd be interested to know, that we found 1 warning sign for Norfolk Southern and you'll want to know about it.

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

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