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Norfolk Southern Corp NSC

Morningstar Rating
$253.55 0.00 (0.00%)
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Company Report

Norfolk Southern's Margins Remain Pressured, but Intermodal Activity Finally Stabilizing

From the start of the rail renaissance in 2004 through 2008, Norfolk Southern posted the highest margins among U.S. Class I railroads. Its operating ratio (expenses/revenue) deteriorated to 75.4% in 2009 during the great recession, and remained stuck between 69% and 73% from 2010 to 2015. This fell short of progress made by Union Pacific and Canadian Pacific, which lack Norfolk's exposure to Appalachian coal. However, by 2017 Norfolk was back on track, improving to an adjusted 60.1% OR in 2021 as it bolstered pricing execution and adopted precision railroading principles, which have yielded more efficient use of locomotive assets and labor. Of note, in late 2019, former Canadian National CEO Claude Mongeau (2010-16) joined Norfolk's board of directors to help bolster PSR efforts.

Price vs Fair Value

NSC is trading at a 10% premium.
Price
$253.55
Fair Value
$335.00
Uncertainty
Medium
1-Star Price
$247.83
5-Star Price
$888.20
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Derailment issues aside, network service levels have improved off a lackluster performance in 2021 and much of 2022 thanks to progress hiring train and engine personnel.

Bears

Insurance coverage should mitigate some of the risk, but the 2023 East Palestine derailment could still yield significant liabilities in terms of fines, and lawsuits.

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News

Trading Information

Previous Close Price
$253.55
Day Range
$253.21255.76
52-Week Range
$183.77261.37
Bid/Ask
$253.48 / $253.59
Market Cap
$57.30 Bil
Volume/Avg
362,148 / 1.2 Mil

Key Statistics

Price/Earnings (Normalized)
21.90
Price/Sales
4.74
Dividend Yield (Trailing)
2.13%
Dividend Yield (Forward)
2.13%
Total Yield
3.21%

Company Profile

Class-I railroad Norfolk Southern operates in the Eastern United States. On more than 20,000 miles of track, the rail hauls shipments of coal, intermodal traffic, and a diverse mix of automobile, agriculture, metal, chemical, and forest products.
Sector
Industrials
Industry
Railroads
Stock Style Box
Large Value
Total Number of Employees
20,700

Competitors

Valuation

Metric
NSC
CSX
UNP
Price/Earnings (Normalized)
21.9020.6324.36
Price/Book Value
4.486.0810.47
Price/Sales
4.745.176.43
Price/Cash Flow
20.5113.9817.85
Price/Earnings
NSC
CSX
UNP

Financial Strength

Metric
NSC
CSX
UNP
Quick Ratio
1.030.880.62
Current Ratio
1.241.050.81
Interest Coverage
4.216.957.11
Quick Ratio
NSC
CSX
UNP

Profitability

Metric
NSC
CSX
UNP
Return on Assets (Normalized)
6.69%8.83%9.63%
Return on Equity (Normalized)
21.05%30.10%47.89%
Return on Invested Capital (Normalized)
11.30%13.72%15.34%
Return on Assets
NSC
CSX
UNP
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Railroads Industry Comparables

Ticker
Name
Morningstar Rating for Stocks
Economic Moat
Market Cap
UNP
Union Pacific CorpSfkkh$154.9 Bil
CNI
Canadian National Railway CoRbjvh$83.5 Bil
CP
Canadian Pacific Kansas City LtdJbt$79.4 Bil
CSX
CSX CorpZwwm$73.8 Bil
WAB
Westinghouse Air Brake Technologies CorpBwy$24.7 Bil
CJPRF
Central Japan Railway CoHprddy$24.6 Bil
CJPRY
Central Japan Railway Co ADRXqvnw$24.6 Bil
CRCCY
CRRC Corp Ltd ADRYpwl$23.2 Bil
EJPRY
East Japan Railway Co ADRSbfbq$22.2 Bil

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