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. While NSC has a great profitability rating, there are quite some 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.
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
Looking at the Return On Assets, with a value of 7.57%, NSC is in the better half of the industry, outperforming 75.00% of the companies in the same industry.
NSC has a Return On Equity of 22.85%. This is amongst the best in the industry. NSC outperforms 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.
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.
NSC's Profit Margin has declined in the last couple of years.
NSC's Operating Margin of 38.28% is amongst the best of the industry. NSC outperforms 97.50% of its industry peers.
In the last couple of years the Operating Margin of NSC has remained more or less at the same level.
NSC has a better Gross Margin (51.12%) 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 | 38.28% | ||
| 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 just above the Cost of Capital (WACC), so NSC is still creating some value.
NSC has more shares outstanding than it did 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
An Altman-Z score of 2.18 indicates that NSC is not a great score, but indicates only limited risk for bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 2.18, NSC is in line with its industry, outperforming 42.50% of the companies in the same 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.
Looking at the Debt to FCF ratio, with a value of 9.11, NSC is in the better half of 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 has a worse Debt to Equity ratio (1.15) than 75.00% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.15 | ||
| Debt/FCF | 9.11 | ||
| Altman-Z | 2.18 |
ROIC/WACC0.99
WACC9.11%
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.
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.
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.
NSC shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 1.42% yearly.
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
The Earnings Per Share is expected to grow by 9.87% on average over the next years. This is quite good.
NSC is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 4.02% yearly.
EPS Next Y7.86%
EPS Next 2Y10.43%
EPS Next 3Y11.13%
EPS Next 5Y9.87%
Revenue Next Year1.66%
Revenue Next 2Y2.98%
Revenue Next 3Y3.65%
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 21.79, NSC is valued on the expensive side.
67.50% of the companies in the same industry are more expensive than NSC, based on the Price/Earnings ratio.
NSC is valuated at similar levels of the S&P average when we compare the Price/Earnings ratio to 27.21, which is the current average of the S&P500 Index.
The Price/Forward Earnings ratio is 18.17, which indicates a rather expensive current valuation of NSC.
67.50% of the companies in the same industry are more expensive than NSC, based on the Price/Forward Earnings ratio.
When comparing the Price/Forward Earnings ratio of NSC to the average of the S&P500 Index (21.70), we can say NSC is valued inline with the index average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 21.79 | ||
| Fwd PE | 18.17 |
4.2 Price Multiples
The rest of the industry has a similar Enterprise Value to EBITDA ratio as NSC.
Based on the Price/Free Cash Flow ratio, NSC is valued a bit cheaper than the industry average as 72.50% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 31.31 | ||
| EV/EBITDA | 12.32 |
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)2.77
PEG (5Y)7.45
EPS Next 2Y10.43%
EPS Next 3Y11.13%
5. Dividend
5.1 Amount
NSC has a Yearly Dividend Yield of 2.11%. Purely for dividend investing, there may be better candidates out there.
Compared to an average industry Dividend Yield of 1.55, NSC pays a better dividend. On top of this NSC pays more dividend than 92.50% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.42, NSC has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.11% |
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
36.85% of the earnings are spent on dividend by NSC. This is a low number and 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 2Y10.43%
EPS Next 3Y11.13%
262.38
+6.41 (+2.5%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupTransportation
GICS IndustryGround Transportation
Earnings (Last)
Earnings (Next)
Inst Owners79.21%
Inst Owner Change-0.19%
Ins Owners0.02%
Ins Owner Change0.96%
Market Cap59.15B
Analysts75.48
Price Target265.15 (1.06%)
Short Float %1.39%
Short Ratio2.4
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.11% |
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)0.27%
PT rev (3m)-6.64%
EPS NQ rev (1m)0.14%
EPS NQ rev (3m)-0.66%
EPS NY rev (1m)0.04%
EPS NY rev (3m)-2.91%
Revenue NQ rev (1m)0.13%
Revenue NQ rev (3m)-0.25%
Revenue NY rev (1m)0.07%
Revenue NY rev (3m)-1.03%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 21.79 | ||
| Fwd PE | 18.17 | ||
| P/S | 4.88 | ||
| P/FCF | 31.31 | ||
| P/OCF | 14.21 | ||
| P/B | 4.08 | ||
| P/tB | 4.08 | ||
| EV/EBITDA | 12.32 |
EPS(TTM)12.04
EY4.59%
EPS(NY)14.44
Fwd EY5.5%
FCF(TTM)8.38
FCFY3.19%
OCF(TTM)18.47
OCFY7.04%
SpS53.73
BVpS64.37
TBVpS64.37
PEG (NY)2.77
PEG (5Y)7.45
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 | 2.18 |
F-Score8
WACC9.11%
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)10.26%
EPS 3Y-0.78%
EPS 5Y2.93%
EPS Q2Q%8.03%
EPS Next Y7.86%
EPS Next 2Y10.43%
EPS Next 3Y11.13%
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 3Y3.65%
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%