NORFOLK SOUTHERN CORP (NSC) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:NSC - US6558441084 - Common Stock
288.97 USD
+0.71 (+0.25%)
289 USD
+0.03 (+0.01%)
We assign a fundamental rating of 5 out of 10 to NSC. NSC was compared to 42 industry peers in the Ground Transportation industry. NSC scores excellent on profitability, but there are concerns on its financial health. NSC is not valued too expensively and it also shows a decent growth rate.
1. Profitability
1.1 Basic Checks
- In the past year NSC was profitable.
- 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 6.64%, NSC is doing good in the industry, outperforming 76.19% of the companies in the same industry.
- Looking at the Return On Equity, with a value of 19.54%, NSC belongs to the top of the industry, outperforming 83.33% of the companies in the same industry.
- NSC's Return On Invested Capital of 8.30% is fine compared to the rest of the industry. NSC outperforms 78.57% of its industry peers.
- NSC had an Average Return On Invested Capital over the past 3 years of 9.15%. This is above the industry average of 6.92%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 6.64% | ||
| ROE | 19.54% | ||
| ROIC | 8.3% |
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 has a better Profit Margin (24.19%) than 88.10% of its industry peers.
- NSC's Profit Margin has declined in the last couple of years.
- With an excellent Operating Margin value of 35.39%, NSC belongs to the best of the industry, outperforming 92.86% 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 50.03% is fine compared to the rest of the industry. NSC outperforms 61.90% of its industry peers.
- In the last couple of years the Gross Margin of NSC has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 35.39% | ||
| PM (TTM) | 24.19% | ||
| GM | 50.03% |
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.
- Compared to 5 years ago, NSC has less shares outstanding
- Compared to 1 year ago, NSC has an improved debt to assets ratio.
2.2 Solvency
- NSC has an Altman-Z score of 2.31. 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.
- NSC has a Altman-Z score (2.31) which is comparable to the rest of the industry.
- The Debt to FCF ratio of NSC is 8.14, which is on the high side as it means it would take NSC, 8.14 years of fcf income to pay off all of its debts.
- NSC has a Debt to FCF ratio of 8.14. This is in the better half of the industry: NSC outperforms 71.43% of its industry peers.
- A Debt/Equity ratio of 1.09 is on the high side and indicates that NSC has dependencies on debt financing.
- The Debt to Equity ratio of NSC (1.09) is worse than 69.05% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.09 | ||
| Debt/FCF | 8.14 | ||
| Altman-Z | 2.31 |
ROIC/WACC0.84
WACC9.91%
2.3 Liquidity
- NSC has a Current Ratio of 0.86. 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 Current ratio of NSC (0.86) is worse than 69.05% of its industry peers.
- A Quick Ratio of 0.78 indicates that NSC may have some problems paying its short term obligations.
- With a Quick ratio value of 0.78, NSC is not doing good in the industry: 71.43% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.86 | ||
| Quick Ratio | 0.78 |
3. Growth
3.1 Past
- The Earnings Per Share has been growing slightly by 5.93% over the past year.
- 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 0.48% in the past year.
- The Revenue has been growing slightly by 1.42% on average over the past years.
EPS 1Y (TTM)5.93%
EPS 3Y-0.78%
EPS 5Y2.93%
EPS Q2Q%1.54%
Revenue 1Y (TTM)0.48%
Revenue growth 3Y2.85%
Revenue growth 5Y1.42%
Sales Q2Q%1.7%
3.2 Future
- NSC is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 7.56% yearly.
- Based on estimates for the next years, NSC will show a small growth in Revenue. The Revenue will grow by 3.64% on average per year.
EPS Next Y2.89%
EPS Next 2Y4.1%
EPS Next 3Y6.27%
EPS Next 5Y7.56%
Revenue Next Year0.66%
Revenue Next 2Y1.67%
Revenue Next 3Y2.67%
Revenue Next 5Y3.64%
3.3 Evolution
- When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
- 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
- NSC is valuated rather expensively with a Price/Earnings ratio of 23.46.
- Based on the Price/Earnings ratio, NSC is valued a bit cheaper than 71.43% of the companies in the same industry.
- When comparing the Price/Earnings ratio of NSC to the average of the S&P500 Index (28.82), we can say NSC is valued inline with the index average.
- A Price/Forward Earnings ratio of 22.52 indicates a rather expensive valuation of NSC.
- Based on the Price/Forward Earnings ratio, NSC is valued a bit cheaper than 69.05% of the companies in the same industry.
- The average S&P500 Price/Forward Earnings ratio is at 25.95. NSC is around the same levels.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 23.46 | ||
| Fwd PE | 22.52 |
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 76.19% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 30.89 | ||
| EV/EBITDA | 14.1 |
4.3 Compensation for Growth
- The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
- NSC has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)8.11
PEG (5Y)8.02
EPS Next 2Y4.1%
EPS Next 3Y6.27%
5. Dividend
5.1 Amount
- With a Yearly Dividend Yield of 1.87%, 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 0.69. NSC pays more dividend than 88.10% of the companies in the same industry.
- Compared to an average S&P500 Dividend Yield of 1.82, NSC has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.87% |
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 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 41.16% of its income as dividend. This is a bit on the high side, but may be sustainable.
- The dividend of NSC is growing, but the earnings are growing slower. This means the dividend growth is not sustainable.
DP41.16%
EPS Next 2Y4.1%
EPS Next 3Y6.27%
NORFOLK SOUTHERN CORP / NSC FAQ
What is the ChartMill fundamental rating of NORFOLK SOUTHERN CORP (NSC) stock?
ChartMill assigns a fundamental rating of 5 / 10 to NSC.
What is the valuation status of NORFOLK SOUTHERN CORP (NSC) stock?
ChartMill assigns a valuation rating of 4 / 10 to NORFOLK SOUTHERN CORP (NSC). This can be considered as Fairly Valued.
What is the profitability of NSC stock?
NORFOLK SOUTHERN CORP (NSC) has a profitability rating of 7 / 10.
Can you provide the expected EPS growth for NSC stock?
The Earnings per Share (EPS) of NORFOLK SOUTHERN CORP (NSC) is expected to grow by 2.89% in the next year.
Is the dividend of NORFOLK SOUTHERN CORP sustainable?
The dividend rating of NORFOLK SOUTHERN CORP (NSC) is 6 / 10 and the dividend payout ratio is 41.16%.