NORFOLK SOUTHERN CORP (NSC) Stock Fundamental Analysis
NYSE:NSC - New York Stock Exchange, Inc. - US6558441084 - Common Stock - Currency: USD
We assign a fundamental rating of 5 out of 10 to NSC. NSC was compared to 40 industry peers in the Ground Transportation industry. NSC scores excellent on profitability, but there are concerns on its financial health. NSC has a correct valuation and a medium growth rate. Finally NSC also has an excellent dividend rating.
1. Profitability
1.1 Basic Checks
NSC had positive earnings in the past year.
In the past year NSC had a positive cash flow from operations.
Each year in the past 5 years NSC has been profitable.
In the past 5 years NSC always reported a positive cash flow from operatings.
1.2 Ratios
With a decent Return On Assets value of 7.57%, NSC is doing good in the industry, outperforming 75.00% of the companies in the same industry.
The Return On Equity of NSC (22.85%) is better than 82.50% of its industry peers.
NSC's Return On Invested Capital of 9.05% is fine compared to the rest of the industry. NSC outperforms 72.50% of its industry peers.
NSC had an Average Return On Invested Capital over the past 3 years of 9.15%. This is in line with the industry average of 8.58%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 7.57% | ||
| ROE | 22.85% | ||
| ROIC | 9.05% |
ROA(3y)6.26%
ROA(5y)6.38%
ROE(3y)19.41%
ROE(5y)18.77%
ROIC(3y)9.15%
ROIC(5y)8.93%
1.3 Margins
Looking at the Profit Margin, with a value of 27.38%, NSC belongs to the top of the industry, outperforming 95.00% of the companies in the same industry.
NSC's Profit Margin has declined in the last couple of years.
The Operating Margin of NSC (38.28%) is better than 97.50% of its industry peers.
NSC's Operating Margin has been stable in the last couple of years.
NSC's Gross Margin of 51.12% is fine compared to the rest of the industry. NSC outperforms 65.00% of its industry peers.
In the last couple of years the Gross Margin of NSC has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 38.28% | ||
| PM (TTM) | 27.38% | ||
| GM | 51.12% |
OM growth 3Y-1.82%
OM growth 5Y1.35%
PM growth 3Y-7.11%
PM growth 5Y-2.12%
GM growth 3Y-0.74%
GM growth 5Y1.7%
2. Health
2.1 Basic Checks
With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), NSC is destroying value.
Compared to 1 year ago, NSC has more shares outstanding
Compared to 5 years ago, NSC has less shares outstanding
The debt/assets ratio for NSC has been reduced compared to a year ago.
2.2 Solvency
An Altman-Z score of 2.29 indicates that NSC is not a great score, but indicates only limited risk for bankruptcy at the moment.
The Altman-Z score of NSC (2.29) is comparable to the rest of the industry.
NSC has a debt to FCF ratio of 9.11. This is a negative value and a sign of low solvency as NSC would need 9.11 years to pay back of all of its debts.
With a decent Debt to FCF ratio value of 9.11, NSC is doing good in the industry, outperforming 67.50% of the companies in the same industry.
A Debt/Equity ratio of 1.15 is on the high side and indicates that NSC has dependencies on debt financing.
NSC's Debt to Equity ratio of 1.15 is on the low side compared to the rest of the industry. NSC is outperformed by 75.00% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.15 | ||
| Debt/FCF | 9.11 | ||
| Altman-Z | 2.29 |
ROIC/WACC0.98
WACC9.22%
2.3 Liquidity
A Current Ratio of 0.78 indicates that NSC may have some problems paying its short term obligations.
With a Current ratio value of 0.78, NSC is not doing good in the industry: 80.00% of the companies in the same industry are doing better.
A Quick Ratio of 0.70 indicates that NSC may have some problems paying its short term obligations.
Looking at the Quick ratio, with a value of 0.70, NSC is doing worse than 85.00% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.78 | ||
| Quick Ratio | 0.7 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an nice 10.26% over the past year.
Measured over the past 5 years, NSC shows a small growth in Earnings Per Share. The EPS has been growing by 2.93% on average per year.
NSC shows a small growth in Revenue. In the last year, the Revenue has grown by 0.70%.
The Revenue has been growing slightly by 1.42% on average over the past years.
EPS 1Y (TTM)10.26%
EPS 3Y-0.78%
EPS 5Y2.93%
EPS Q2Q%8.03%
Revenue 1Y (TTM)0.7%
Revenue growth 3Y2.85%
Revenue growth 5Y1.42%
Sales Q2Q%-0.37%
3.2 Future
Based on estimates for the next years, NSC will show a quite strong growth in Earnings Per Share. The EPS will grow by 9.87% on average per year.
The Revenue is expected to grow by 4.02% on average over the next years.
EPS Next Y7.66%
EPS Next 2Y10.36%
EPS Next 3Y11.14%
EPS Next 5Y9.87%
Revenue Next Year1.66%
Revenue Next 2Y2.98%
Revenue Next 3Y3.64%
Revenue Next 5Y4.02%
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 23.28, NSC is valued on the expensive side.
Based on the Price/Earnings ratio, NSC is valued a bit cheaper than the industry average as 67.50% of the companies are valued more expensively.
Compared to an average S&P500 Price/Earnings ratio of 27.69, NSC is valued at the same level.
A Price/Forward Earnings ratio of 19.44 indicates a rather expensive valuation of NSC.
Based on the Price/Forward Earnings ratio, NSC is valued a bit cheaper than 65.00% of the companies in the same industry.
When comparing the Price/Forward Earnings ratio of NSC to the average of the S&P500 Index (37.36), we can say NSC is valued slightly cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 23.28 | ||
| Fwd PE | 19.44 |
4.2 Price Multiples
NSC's Enterprise Value to EBITDA ratio is in line with the industry average.
72.50% of the companies in the same industry are more expensive than NSC, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 33.45 | ||
| EV/EBITDA | 13.24 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates NSC does not grow enough to justify the current Price/Earnings ratio.
NSC has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)3.04
PEG (5Y)7.96
EPS Next 2Y10.36%
EPS Next 3Y11.14%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 2.00%, NSC has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 1.53, NSC pays a better dividend. On top of this NSC pays more dividend than 90.00% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.34, NSC has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2% |
5.2 History
The dividend of NSC is nicely growing with an annual growth rate of 8.41%!
NSC has paid a dividend for at least 10 years, which is a reliable track record.
NSC has not decreased their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)8.41%
Div Incr Years0
Div Non Decr Years23
5.3 Sustainability
NSC pays out 36.85% of its income as dividend. This is a sustainable payout ratio.
NSC's earnings are growing around the same pace than its dividend. As long as the earnings growth is kept the dividend growth is sustainable.
DP36.85%
EPS Next 2Y10.36%
EPS Next 3Y11.14%
280.27
0.01 (0%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupTransportation
GICS IndustryGround Transportation
Earnings (Last)
Earnings (Next)
Inst Owners79.21%
Inst Owner Change0.33%
Ins Owners0.02%
Ins Owner Change0.96%
Market Cap63.18B
Analysts74.38
Price Target276.86 (-1.22%)
Short Float %1.33%
Short Ratio2.35
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2% |
Yearly Dividend5.4
Dividend Growth(5Y)8.41%
DP36.85%
Div Incr Years0
Div Non Decr Years23
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)0.47%
Min EPS beat(2)-0.99%
Max EPS beat(2)1.93%
EPS beat(4)3
Avg EPS beat(4)2.58%
Min EPS beat(4)-0.99%
Max EPS beat(4)5.87%
EPS beat(8)3
Avg EPS beat(8)-0.69%
EPS beat(12)5
Avg EPS beat(12)0.69%
EPS beat(16)8
Avg EPS beat(16)1.46%
Revenue beat(2)0
Avg Revenue beat(2)-0.72%
Min Revenue beat(2)-1.01%
Max Revenue beat(2)-0.43%
Revenue beat(4)0
Avg Revenue beat(4)-1.09%
Min Revenue beat(4)-2.12%
Max Revenue beat(4)-0.43%
Revenue beat(8)0
Avg Revenue beat(8)-1.55%
Revenue beat(12)3
Avg Revenue beat(12)-0.62%
Revenue beat(16)7
Avg Revenue beat(16)-0.12%
PT rev (1m)4.6%
PT rev (3m)-1.73%
EPS NQ rev (1m)0.72%
EPS NQ rev (3m)1.21%
EPS NY rev (1m)-0.18%
EPS NY rev (3m)-0.85%
Revenue NQ rev (1m)0.45%
Revenue NQ rev (3m)0.67%
Revenue NY rev (1m)0.01%
Revenue NY rev (3m)-0.59%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 23.28 | ||
| Fwd PE | 19.44 | ||
| P/S | 5.22 | ||
| P/FCF | 33.45 | ||
| P/OCF | 15.18 | ||
| P/B | 4.35 | ||
| P/tB | 4.35 | ||
| EV/EBITDA | 13.24 |
EPS(TTM)12.04
EY4.3%
EPS(NY)14.42
Fwd EY5.15%
FCF(TTM)8.38
FCFY2.99%
OCF(TTM)18.47
OCFY6.59%
SpS53.73
BVpS64.37
TBVpS64.37
PEG (NY)3.04
PEG (5Y)7.96
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 7.57% | ||
| ROE | 22.85% | ||
| ROCE | 11.49% | ||
| ROIC | 9.05% | ||
| ROICexc | 9.28% | ||
| ROICexgc | 9.28% | ||
| OM | 38.28% | ||
| PM (TTM) | 27.38% | ||
| GM | 51.12% | ||
| FCFM | 15.6% |
ROA(3y)6.26%
ROA(5y)6.38%
ROE(3y)19.41%
ROE(5y)18.77%
ROIC(3y)9.15%
ROIC(5y)8.93%
ROICexc(3y)9.43%
ROICexc(5y)9.19%
ROICexgc(3y)9.43%
ROICexgc(5y)9.19%
ROCE(3y)11.62%
ROCE(5y)11.33%
ROICexcg growth 3Y-2.05%
ROICexcg growth 5Y0.88%
ROICexc growth 3Y-2.05%
ROICexc growth 5Y0.88%
OM growth 3Y-1.82%
OM growth 5Y1.35%
PM growth 3Y-7.11%
PM growth 5Y-2.12%
GM growth 3Y-0.74%
GM growth 5Y1.7%
F-Score8
Asset Turnover0.28
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.15 | ||
| Debt/FCF | 9.11 | ||
| Debt/EBITDA | 2.78 | ||
| Cap/Depr | 166.96% | ||
| Cap/Sales | 18.77% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 69.41% | ||
| Profit Quality | 56.97% | ||
| Current Ratio | 0.78 | ||
| Quick Ratio | 0.7 | ||
| Altman-Z | 2.29 |
F-Score8
WACC9.22%
ROIC/WACC0.98
Cap/Depr(3y)212.64%
Cap/Depr(5y)178.37%
Cap/Sales(3y)22.6%
Cap/Sales(5y)19.25%
Profit Quality(3y)38.72%
Profit Quality(5y)63.1%
High Growth Momentum
Growth
EPS 1Y (TTM)10.26%
EPS 3Y-0.78%
EPS 5Y2.93%
EPS Q2Q%8.03%
EPS Next Y7.66%
EPS Next 2Y10.36%
EPS Next 3Y11.14%
EPS Next 5Y9.87%
Revenue 1Y (TTM)0.7%
Revenue growth 3Y2.85%
Revenue growth 5Y1.42%
Sales Q2Q%-0.37%
Revenue Next Year1.66%
Revenue Next 2Y2.98%
Revenue Next 3Y3.64%
Revenue Next 5Y4.02%
EBIT growth 1Y22.87%
EBIT growth 3Y0.98%
EBIT growth 5Y2.8%
EBIT Next Year39.42%
EBIT Next 3Y17.06%
EBIT Next 5Y12.96%
FCF growth 1Y-21.75%
FCF growth 3Y-78.42%
FCF growth 5Y-56.86%
OCF growth 1Y-5.41%
OCF growth 3Y-1.62%
OCF growth 5Y0.81%