NORFOLK SOUTHERN CORP (NSC) Stock Fundamental Analysis
NYSE:NSC - New York Stock Exchange, Inc. - US6558441084 - Common Stock - Currency: USD
Taking everything into account, NSC scores 5 out of 10 in our fundamental rating. 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
In the past year NSC was profitable.
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
NSC has a better Return On Assets (7.57%) than 75.00% of its industry peers.
NSC has a better Return On Equity (22.85%) than 82.50% of its industry peers.
The Return On Invested Capital of NSC (9.05%) is better than 72.50% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital 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
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.
In the last couple of years the Profit Margin of NSC has declined.
Looking at the Operating Margin, with a value of 38.28%, NSC belongs to the top of the industry, outperforming 97.50% of the companies in the same industry.
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.
NSC's Gross Margin has improved in the last couple of years.
| 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.
Compared to 1 year ago, NSC has more shares outstanding
The number of shares outstanding for NSC has been reduced compared to 5 years ago.
Compared to 1 year ago, NSC has an improved debt to assets ratio.
2.2 Solvency
NSC has an Altman-Z score of 2.28. This is not the best score and indicates that NSC is in the grey zone with still only limited risk for bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 2.28, NSC is in line with its industry, outperforming 47.50% of the companies in the same 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.
NSC has a Debt to FCF ratio of 9.11. This is in the better half of the industry: NSC outperforms 67.50% of its industry peers.
NSC has a Debt/Equity ratio of 1.15. This is a high value indicating a heavy dependency on external 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 | 2.28 |
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.
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.
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.
The Quick ratio of NSC (0.70) is worse than 85.00% of its industry peers.
| 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.
The Earnings Per Share has been growing slightly by 2.93% on average over the past years.
Looking at the last year, NSC shows a small growth in Revenue. The Revenue has grown by 0.70% in the last year.
Measured over the past years, NSC shows a small growth in Revenue. The Revenue has been growing by 1.42% on average per year.
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
NSC is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 9.87% yearly.
NSC is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 4.02% yearly.
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.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
4. Valuation
4.1 Price/Earnings Ratio
NSC is valuated rather expensively with a Price/Earnings ratio of 23.28.
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.
Compared to an average S&P500 Price/Earnings ratio of 27.53, NSC is valued at the same level.
The Price/Forward Earnings ratio is 19.44, which indicates a rather expensive current valuation of NSC.
NSC's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. NSC is cheaper than 65.00% of the companies in the same industry.
NSC's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 36.71.
| 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.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of NSC indicates a somewhat cheap valuation: NSC is cheaper than 67.50% of the companies listed in the same industry.
| 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
With a Yearly Dividend Yield of 2.00%, NSC has a reasonable but not impressive dividend return.
NSC's Dividend Yield is rather good when compared to the industry average which is at 1.53. NSC pays more dividend than 90.00% of the companies 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 paid a dividend for at least 10 years, which is 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
36.85% of the earnings are spent on dividend by NSC. This is a low number and 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%
280.26
+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%