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 scores excellent on profitability, but there are concerns on its financial health. NSC has a correct valuation and a medium growth rate. 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.
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 7.58%, NSC is doing good in the industry, outperforming 75.00% of the companies in the same industry.
NSC has a Return On Equity of 22.63%. This is amongst the best in the industry. NSC outperforms 85.00% of its industry peers.
NSC has a better Return On Invested Capital (9.16%) than 70.00% 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 8.50%.
The 3 year average ROIC (9.15%) for NSC is below the current ROIC(9.16%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 7.58% | ||
| ROE | 22.63% | ||
| ROIC | 9.16% |
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 27.48%, 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.
NSC has a Operating Margin of 38.68%. This is amongst the best in the industry. NSC outperforms 97.50% of its industry peers.
NSC's Operating Margin has been stable in the last couple of years.
NSC has a better Gross Margin (51.67%) than 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 | 38.68% | ||
| PM (TTM) | 27.48% | ||
| GM | 51.67% |
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
NSC has less shares outstanding than it did 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 2.30 indicates that NSC is not a great score, but indicates only limited risk for bankruptcy at the moment.
NSC has a Altman-Z score (2.30) which is in line with its industry peers.
NSC has a debt to FCF ratio of 8.58. This is a slightly negative value and a sign of low solvency as NSC would need 8.58 years to pay back of all of its debts.
NSC's Debt to FCF ratio of 8.58 is fine compared to the rest of the industry. NSC outperforms 70.00% of its industry peers.
A Debt/Equity ratio of 1.11 is on the high side and indicates that NSC has dependencies on debt financing.
NSC has a worse Debt to Equity ratio (1.11) than 77.50% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.11 | ||
| Debt/FCF | 8.58 | ||
| Altman-Z | 2.3 |
ROIC/WACC0.99
WACC9.25%
2.3 Liquidity
NSC has a Current Ratio of 0.79. This is a bad value and indicates that NSC is not financially healthy enough and could expect problems in meeting its short term obligations.
With a Current ratio value of 0.79, NSC is not doing good in the industry: 80.00% of the companies in the same industry are doing better.
A Quick Ratio of 0.71 indicates that NSC may have some problems paying its short term obligations.
Looking at the Quick ratio, with a value of 0.71, NSC is doing worse than 77.50% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.79 | ||
| Quick Ratio | 0.71 |
3. Growth
3.1 Past
NSC shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 11.24%, which is quite good.
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.
The Revenue has been growing slightly by 0.71% in the past 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)11.24%
EPS 3Y-0.78%
EPS 5Y2.93%
EPS Q2Q%7.52%
Revenue 1Y (TTM)0.71%
Revenue growth 3Y2.85%
Revenue growth 5Y1.42%
Sales Q2Q%2.17%
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.
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 Year1.85%
Revenue Next 2Y3.09%
Revenue Next 3Y3.7%
Revenue Next 5Y4.02%
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
The Price/Earnings ratio is 22.88, which indicates a rather expensive current valuation of NSC.
65.00% of the companies in the same industry are more expensive than NSC, based on the Price/Earnings ratio.
The average S&P500 Price/Earnings ratio is at 26.87. NSC is around the same levels.
NSC is valuated rather expensively with a Price/Forward Earnings ratio of 19.47.
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.
The average S&P500 Price/Forward Earnings ratio is at 35.34. NSC is valued slightly cheaper when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 22.88 | ||
| Fwd PE | 19.47 |
4.2 Price Multiples
NSC's Enterprise Value to EBITDA ratio is in line with the industry average.
Based on the Price/Free Cash Flow ratio, NSC is valued a bit cheaper than the industry average as 75.00% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 31.12 | ||
| EV/EBITDA | 13.06 |
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.
The excellent profitability rating of NSC may justify a higher PE ratio.
PEG (NY)2.99
PEG (5Y)7.82
EPS Next 2Y10.36%
EPS Next 3Y11.14%
5. Dividend
5.1 Amount
NSC has a Yearly Dividend Yield of 1.93%.
Compared to an average industry Dividend Yield of 1.63, NSC pays a better dividend. On top of this NSC pays more dividend than 82.50% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.39, NSC has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.93% |
5.2 History
The dividend of NSC is nicely growing with an annual growth rate of 8.41%!
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 36.45% 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.
DP36.45%
EPS Next 2Y10.36%
EPS Next 3Y11.14%
280.74
-1.76 (-0.62%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupTransportation
GICS IndustryGround Transportation
Earnings (Last)
Earnings (Next)
Inst Owners79.66%
Inst Owner Change-0.1%
Ins Owners0.02%
Ins Owner Change0.53%
Market Cap62.98B
Analysts70
Price Target300.16 (6.92%)
Short Float %1.19%
Short Ratio1.6
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.93% |
Yearly Dividend5.4
Dividend Growth(5Y)8.41%
DP36.45%
Div Incr Years0
Div Non Decr Years23
Ex-Date
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-1.19%
Min EPS beat(2)-1.39%
Max EPS beat(2)-0.99%
EPS beat(4)2
Avg EPS beat(4)0.76%
Min EPS beat(4)-1.39%
Max EPS beat(4)3.5%
EPS beat(8)3
Avg EPS beat(8)-0.08%
EPS beat(12)5
Avg EPS beat(12)0.7%
EPS beat(16)7
Avg EPS beat(16)0.76%
Revenue beat(2)0
Avg Revenue beat(2)-1.02%
Min Revenue beat(2)-1.61%
Max Revenue beat(2)-0.43%
Revenue beat(4)0
Avg Revenue beat(4)-1.29%
Min Revenue beat(4)-2.12%
Max Revenue beat(4)-0.43%
Revenue beat(8)0
Avg Revenue beat(8)-1.24%
Revenue beat(12)2
Avg Revenue beat(12)-0.98%
Revenue beat(16)6
Avg Revenue beat(16)-0.28%
PT rev (1m)13.2%
PT rev (3m)13.51%
EPS NQ rev (1m)-1.1%
EPS NQ rev (3m)-3.65%
EPS NY rev (1m)0%
EPS NY rev (3m)-0.85%
Revenue NQ rev (1m)-0.16%
Revenue NQ rev (3m)-1.25%
Revenue NY rev (1m)0.18%
Revenue NY rev (3m)0.27%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 22.88 | ||
| Fwd PE | 19.47 | ||
| P/S | 5.17 | ||
| P/FCF | 31.12 | ||
| P/OCF | 14.98 | ||
| P/B | 4.26 | ||
| P/tB | 4.26 | ||
| EV/EBITDA | 13.06 |
EPS(TTM)12.27
EY4.37%
EPS(NY)14.42
Fwd EY5.14%
FCF(TTM)9.02
FCFY3.21%
OCF(TTM)18.74
OCFY6.67%
SpS54.28
BVpS65.91
TBVpS65.91
PEG (NY)2.99
PEG (5Y)7.82
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 7.58% | ||
| ROE | 22.63% | ||
| ROCE | 11.64% | ||
| ROIC | 9.16% | ||
| ROICexc | 9.47% | ||
| ROICexgc | 9.47% | ||
| OM | 38.68% | ||
| PM (TTM) | 27.48% | ||
| GM | 51.67% | ||
| FCFM | 16.62% |
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 | 1.11 | ||
| Debt/FCF | 8.58 | ||
| Debt/EBITDA | 2.71 | ||
| Cap/Depr | 158.78% | ||
| Cap/Sales | 17.9% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 69.1% | ||
| Profit Quality | 60.47% | ||
| Current Ratio | 0.79 | ||
| Quick Ratio | 0.71 | ||
| Altman-Z | 2.3 |
F-Score8
WACC9.25%
ROIC/WACC0.99
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)11.24%
EPS 3Y-0.78%
EPS 5Y2.93%
EPS Q2Q%7.52%
EPS Next Y7.66%
EPS Next 2Y10.36%
EPS Next 3Y11.14%
EPS Next 5Y9.87%
Revenue 1Y (TTM)0.71%
Revenue growth 3Y2.85%
Revenue growth 5Y1.42%
Sales Q2Q%2.17%
Revenue Next Year1.85%
Revenue Next 2Y3.09%
Revenue Next 3Y3.7%
Revenue Next 5Y4.02%
EBIT growth 1Y22.55%
EBIT growth 3Y0.98%
EBIT growth 5Y2.8%
EBIT Next Year39.89%
EBIT Next 3Y16.95%
EBIT Next 5Y12.96%
FCF growth 1Y1.3%
FCF growth 3Y-78.42%
FCF growth 5Y-56.86%
OCF growth 1Y3.62%
OCF growth 3Y-1.62%
OCF growth 5Y0.81%