NORFOLK SOUTHERN CORP (NSC) Stock Fundamental Analysis
NYSE:NSC - New York Stock Exchange, Inc. - US6558441084 - Common Stock - Currency: USD
NSC gets a fundamental rating of 5 out of 10. The analysis compared the fundamentals against 40 industry peers in the Ground Transportation industry. NSC has an excellent profitability rating, 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.
NSC had a positive operating cash flow in the past year.
NSC had positive earnings in each of the past 5 years.
Each year in the past 5 years NSC had a positive operating cash flow.
1.2 Ratios
The Return On Assets of NSC (7.57%) is better than 75.00% of its industry peers.
Looking at the Return On Equity, with a value of 22.85%, NSC belongs to the top of the industry, outperforming 82.50% of the companies in the same industry.
Looking at the Return On Invested Capital, with a value of 9.05%, NSC is in the better half of the industry, outperforming 72.50% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for NSC 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
NSC's Profit Margin of 27.38% is amongst the best of the industry. NSC outperforms 95.00% of its industry peers.
In the last couple of years the Profit Margin of NSC has declined.
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
The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so NSC is destroying value.
The number of shares outstanding for NSC has been increased compared to 1 year ago.
The number of shares outstanding for NSC has been reduced compared to 5 years ago.
The debt/assets ratio for NSC has been reduced compared to a year ago.
2.2 Solvency
An Altman-Z score of 2.28 indicates that NSC is not a great score, but indicates only limited risk for bankruptcy at the moment.
NSC has a Altman-Z score (2.28) which is comparable to the rest of the industry.
The Debt to FCF ratio of NSC is 9.11, which is on the high side as it means it would take NSC, 9.11 years of fcf income to pay off all of its debts.
The Debt to FCF ratio of NSC (9.11) is better than 67.50% of its industry peers.
A Debt/Equity ratio of 1.15 is on the high side and indicates that NSC has dependencies on debt financing.
The Debt to Equity ratio of NSC (1.15) is worse than 75.00% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.15 | ||
| Debt/FCF | 9.11 | ||
| Altman-Z | 2.28 |
ROIC/WACC0.98
WACC9.23%
2.3 Liquidity
A Current Ratio of 0.78 indicates that NSC may have some problems paying its short term obligations.
NSC has a Current ratio of 0.78. This is amonst the worse of the industry: NSC underperforms 80.00% of its industry peers.
NSC has a Quick Ratio of 0.78. This is a bad value and indicates that NSC is not financially healthy enough and could expect problems in meeting 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
NSC shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 10.26%, which is quite good.
NSC shows a small growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 2.93% yearly.
The Revenue has been growing slightly by 0.70% in the past year.
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
The Price/Earnings ratio is 23.28, which indicates a rather expensive current valuation of NSC.
NSC's Price/Earnings ratio is a bit cheaper when compared to the industry. NSC is cheaper than 67.50% of the companies in the same industry.
The average S&P500 Price/Earnings ratio is at 27.53. NSC is around the same levels.
A Price/Forward Earnings ratio of 19.44 indicates a rather expensive valuation of NSC.
Compared to the rest of the industry, the Price/Forward Earnings ratio of NSC indicates a somewhat cheap valuation: NSC is cheaper than 65.00% of the companies listed in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 36.71, NSC is valued a bit cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 23.28 | ||
| Fwd PE | 19.44 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of NSC is on the same level as its industry peers.
67.50% 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 | 13.13 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
The decent profitability rating of NSC 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
NSC has a Yearly Dividend Yield of 2.00%.
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.
NSC's Dividend Yield is comparable with the S&P500 average which is at 2.34.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2% |
5.2 History
On average, the dividend of NSC grows each year by 8.41%, which is quite nice.
NSC has been paying a dividend for at least 10 years, so it has a reliable track record.
NSC has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
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.
The dividend of NSC is growing around the same rate as the earnings are growing. If this keeps up the dividend growth is sustainable.
DP36.85%
EPS Next 2Y10.36%
EPS Next 3Y11.14%
280.26
+2.88 (+1.04%)
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 (-1.21%)
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 | 13.13 |
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 | 2.28 |
F-Score8
WACC9.23%
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%