What Is Norfolk Southern Corporation's (NYSE:NSC) Share Price Doing?

By
Simply Wall St
Published
December 04, 2021
NYSE:NSC
Source: Shutterstock

Norfolk Southern Corporation (NYSE:NSC) saw a double-digit share price rise of over 10% in the past couple of months on the NYSE. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Let’s examine Norfolk Southern’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for Norfolk Southern

What's the opportunity in Norfolk Southern?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 7.68% above my intrinsic value, which means if you buy Norfolk Southern today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth $261.18, there’s only an insignificant downside when the price falls to its real value. So, is there another chance to buy low in the future? Given that Norfolk Southern’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of Norfolk Southern look like?

earnings-and-revenue-growth
NYSE:NSC Earnings and Revenue Growth December 5th 2021

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. 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 track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair 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 positive outlook 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'd like to know more about Norfolk Southern as a business, it's important to be aware of any risks it's facing. Every company has risks, and we've spotted 1 warning sign for Norfolk Southern you should know about.

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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