Norfolk Southern (NYSE:NSC) - Share price, News & Analysis

Q: What is the Fair Price of NSC when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

NSC ($261.84) is trading below our estimate of [[fair value]] ($261.92)

NSC fundamental analysis
Snowflake Score
Valuation	2/6
Future Growth	2/6
Past Performance	2/6
Financial Health	3/6
Dividends	5/6

NSC Stock Overview

Norfolk Southern Corporation, together with its subsidiaries, engages in the rail transportation of raw materials, intermediate products, and finished goods in the United States.

Rewards

Trading at 0.03% below our estimate of its fair value

Earnings are forecast to grow 5.86% per year

Pays a reliable dividend of 1.89%

Risk Analysis

Has a high level of debt

Norfolk Southern Competitors

CSX

NasdaqGS:CSX

US$73.6b

Union Pacific

NYSE:UNP

US$149.8b

Old Dominion Freight Line

NasdaqGS:ODFL

US$35.1b

FedEx

NYSE:FDX

US$59.9b

Price History & Performance

Summary of all time highs, changes and price drops for Norfolk Southern
Historical stock prices
Current Share Price	US$261.84
52 Week High	US$299.20
52 Week Low	US$217.00
Beta	1.32
1 Month Change	18.11%
3 Month Change	5.02%
1 Year Change	-2.63%
3 Year Change	51.35%
5 Year Change	120.72%
Change since IPO	1,781.49%

Recent News & Updates

Aug 04

Norfolk Southern (NYSE:NSC) Is Looking To Continue Growing Its Returns On Capital

If you're not sure where to start when looking for the next multi-bagger, there are a few key trends you should keep an...

Jul 26

Norfolk Southern Q2 2022 Earnings Preview

Norfolk Southern (NYSE:NSC) is scheduled to announce Q2 earnings results on Wednesday, July 27th, before market open. The consensus EPS Estimate is $3.47 (+5.8% Y/Y) and the consensus Revenue Estimate is $3.14B (+12.1% Y/Y). Over the last 1 year, NSC has beaten EPS estimates 100% of the time and has beaten revenue estimates 50% of the time. Over the last 3 months, EPS estimates have seen 9 upward revisions and 10 downward. Revenue estimates have seen 10 upward revisions and 5 downward. Recent earnings Analysis from our contributors:Norfolk Southern: Upcoming Earnings And An Industry Breakdown

Jul 22

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

Let's talk about the popular Norfolk Southern Corporation ( NYSE:NSC ). The company's shares received a lot of...

Shareholder Returns

	NSC	US Transportation	US Market
7D	4.3%	3.4%	3.2%
1Y	-2.6%	-13.7%	-10.2%

Return vs Industry: NSC exceeded the US Transportation industry which returned -13.7% over the past year.

Return vs Market: NSC exceeded the US Market which returned -10.1% over the past year.

Price Volatility

Is NSC's price volatile compared to industry and market?
NSC volatility
NSC Average Weekly Movement	3.9%
Transportation Industry Average Movement	8.3%
Market Average Movement	7.7%
10% most volatile stocks in US Market	16.9%
10% least volatile stocks in US Market	3.2%

Stable Share Price: NSC is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 4% a week.

Volatility Over Time: NSC's weekly volatility (4%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1980	18,100	Alan Shaw	https://www.norfolksouthern.com

Norfolk Southern Corporation, together with its subsidiaries, engages in the rail transportation of raw materials, intermediate products, and finished goods in the United States. The company transports agriculture, forest, and consumer products comprising soybeans, wheat, corn, fertilizers, livestock and poultry feed, food products, food oils, flour, sweeteners, ethanol, lumber and wood products, pulp board and paper products, wood fibers, wood pulp, scrap paper, beverages, canned goods, and consumer products; chemicals consist of sulfur and related chemicals, petroleum products, chlorine and bleaching compounds, plastics, rubber, industrial chemicals, chemical wastes, and sand; metals and construction materials, such as steel, aluminum products, machinery, scrap metals, cement, aggregates, minerals, clay, transportation equipment, and military-related products; and automotive, including finished motor vehicles and automotive parts, as well as coal. It also transports overseas freight through various Atlantic and Gulf Coast ports; and provides commuter rail passenger transportation services and operates an intermodal network.

Norfolk Southern Fundamentals Summary

How do Norfolk Southern's earnings and revenue compare to its market cap?
NSC fundamental statistics
Market Cap	US$61.50b
Earnings (TTM)	US$3.03b
Revenue (TTM)	US$11.87b

20.3x

P/E Ratio

5.2x

P/S Ratio

Is NSC overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
NSC income statement (TTM)
Revenue	US$11.87b
Cost of Revenue	US$5.93b
Gross Profit	US$5.94b
Other Expenses	US$2.91b
Earnings	US$3.03b

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)	12.91
Gross Margin	50.03%
Net Profit Margin	25.55%
Debt/Equity Ratio	118.5%

How did NSC perform over the long term?

See historical performance and comparison

Dividends

1.9%

Current Dividend Yield

37%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is NSC undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

2/6

Valuation Score 2/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for NSC?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for NSC. This is calculated by dividing NSC's market cap by their current preferred multiple.
What is NSC's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	US$61.50b

NSC key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	6.4x
Enterprise Value/EBITDA	12.8x
PEG Ratio	3.5x

Price to Earnings Ratio vs Peers

How does NSC's PE Ratio compare to its peers?

NSC PE Ratio vs Peers

The above table shows the PE ratio for NSC vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	21.1x
CSX CSX	18.7x	2.9%	US$73.6b
UNP Union Pacific	21.9x	6.2%	US$149.8b
ODFL Old Dominion Freight Line	28.3x	5.9%	US$35.1b
FDX FedEx	15.7x	15.8%	US$59.9b
NSC Norfolk Southern	20.3x	5.9%	US$61.5b

Price-To-Earnings vs Peers: NSC is good value based on its Price-To-Earnings Ratio (20.3x) compared to the peer average (21.1x).

Price to Earnings Ratio vs Industry

How does NSC's PE Ratio compare vs other companies in the US Transportation Industry?

Price-To-Earnings vs Industry: NSC is expensive based on its Price-To-Earnings Ratio (20.3x) compared to the US Transportation industry average (10x)

Price to Earnings Ratio vs Fair Ratio

What is NSC's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

NSC PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	20.3x
Fair PE Ratio	18.7x

Price-To-Earnings vs Fair Ratio: NSC is expensive based on its Price-To-Earnings Ratio (20.3x) compared to the estimated Fair Price-To-Earnings Ratio (18.7x).

Share Price vs Fair Value

What is the Fair Price of NSC when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: NSC ($261.84) is trading below our estimate of fair value ($261.92)

Significantly Below Fair Value: NSC is trading below fair value, but not by a significant amount.

Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is less than 20% higher than the current share price.

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Future Growth

How is Norfolk Southern forecast to perform in the next 1 to 3 years based on estimates from 22 analysts?

Future Growth Score

2/6

Future Growth Score 2/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

5.9%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: NSC's forecast earnings growth (5.9% per year) is above the savings rate (1.9%).

Earnings vs Market: NSC's earnings (5.9% per year) are forecast to grow slower than the US market (14.4% per year).

High Growth Earnings: NSC's earnings are forecast to grow, but not significantly.

Revenue vs Market: NSC's revenue (3.3% per year) is forecast to grow slower than the US market (7.9% per year).

High Growth Revenue: NSC's revenue (3.3% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: NSC's Return on Equity is forecast to be high in 3 years time (24.9%)

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Past Performance

How has Norfolk Southern performed over the past 5 years?

Past Performance Score

2/6

Past Performance Score 2/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

-9.5%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: NSC has high quality earnings.

Growing Profit Margin: NSC's current net profit margins (25.6%) are lower than last year (25.9%).

Past Earnings Growth Analysis

Earnings Trend: NSC's earnings have declined by 9.5% per year over the past 5 years.

Accelerating Growth: NSC's earnings growth over the past year (11.1%) exceeds its 5-year average (-9.5% per year).

Earnings vs Industry: NSC earnings growth over the past year (11.1%) underperformed the Transportation industry 62.5%.

Return on Equity

High ROE: Whilst NSC's Return on Equity (23.07%) is high, this metric is skewed due to their high level of debt.

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Financial Health

How is Norfolk Southern's financial position?

Financial Health Score

3/6

Financial Health Score 3/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: NSC's short term assets ($2.9B) exceed its short term liabilities ($2.6B).

Long Term Liabilities: NSC's short term assets ($2.9B) do not cover its long term liabilities ($23.6B).

Debt to Equity History and Analysis

Debt Level: NSC's net debt to equity ratio (108.9%) is considered high.

Reducing Debt: NSC's debt to equity ratio has increased from 80.2% to 118.5% over the past 5 years.

Debt Coverage: NSC's debt is well covered by operating cash flow (26.7%).

Interest Coverage: NSC's interest payments on its debt are well covered by EBIT (7.1x coverage).

Balance Sheet

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Dividend

What is Norfolk Southern current dividend yield, its reliability and sustainability?

Dividend Score

5/6

Dividend Score 5/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Cash Flow Coverage

1.89%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: NSC's dividend (1.89%) is higher than the bottom 25% of dividend payers in the US market (1.47%).

High Dividend: NSC's dividend (1.89%) is low compared to the top 25% of dividend payers in the US market (3.96%).

Stability and Growth of Payments

Stable Dividend: NSC's dividends per share have been stable in the past 10 years.

Growing Dividend: NSC's dividend payments have increased over the past 10 years.

Earnings Payout to Shareholders

Earnings Coverage: With its reasonably low payout ratio (37%), NSC's dividend payments are well covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: With its reasonably low cash payout ratio (46.8%), NSC's dividend payments are well covered by cash flows.

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Management

How experienced are the management team and are they aligned to shareholders interests?

1.9yrs

Average management tenure

CEO

Alan Shaw (54 yo)

0.67

Tenure

US$4,362,801

Compensation

Mr. Alan H. Shaw has been President at Norfolk Southern Corporation since December 02, 2021 and serves as its Chief Executive Officer and Director since May 01, 2022. He was Chief Marketing Officer and Exe...

CEO Compensation Analysis

Compensation vs Market: Alan's total compensation ($USD4.36M) is below average for companies of similar size in the US market ($USD12.88M).

Compensation vs Earnings: Alan's compensation has been consistent with company performance over the past year.

Leadership Team

Experienced Management: NSC's management team is not considered experienced ( 1.9 years average tenure), which suggests a new team.

Board Members

Experienced Board: NSC's board of directors are considered experienced (7.2 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/08/13 00:00
End of Day Share Price	2022/08/12 00:00
Earnings	2022/06/30
Annual Earnings	2021/12/31