NSC Norfolk Southern Corporation - Fundamental Analysis
NEUTRAL
NSC Stock | Fundamental Analysis & Investment Insights
NYSE
•
Industrials
•
Railroads
Current Price
$283.98
Analyst Target
$311.5
+9.7% Upside
52W High
$302.24
52W Low
$201.63
AI Analysis
Powered by advanced machine learning algorithms
Confidence Score
72%
Analysis Accuracy
Norfolk Southern trades at a premium valuation with solid profitability and a disciplined capital return profile, but faces headwinds from near-term earnings contraction and modest revenue growth. Despite strong historical margins—ROIC and operating margin well above sector averages—the YoY earnings decline of 34.9% and weak Q/Q EPS momentum raise concerns about cyclical pressures in freight demand. The stock is fairly valued relative to peers like NOC and ITW, supported by a favorable analyst consensus (buy) and resilient dividend policy, though insider inactivity and liquidity constraints temper bullish conviction. Price performance has been mixed, with solid 6M gains (+16.5%) offset by recent underperformance (-1.5% over 1M), reflecting macro uncertainty in the industrial sector.
Key Strengths
Operating margin of 36.58% significantly exceeds sector average of 12.01%, demonstrating pricing power and cost discipline
ROE of 20.48% outperforms peer PCAR (14.15%) and approaches NOC (26.15%), indicating efficient equity utilization
Dividend payout ratio of 41.19% is sustainable given earnings base and below 50% threshold, supporting yield of 1.90%
Profit margin of 24.22% is more than double the sector average, highlighting superior profitability
Analyst target price of $311.50 implies 9.7% upside, with unanimous buy rating from 18 analysts signaling strong external confidence
Key Risks
Earnings growth down 34.9% YoY and -35.3% Q/Q indicates severe near-term profitability pressure despite margin strength
Revenue growth of only 1.7% YoY lags sector average of 7.13%, suggesting weak volume or pricing dynamics in rail freight
Current ratio of 0.86 and quick ratio of 0.71 indicate tight liquidity, below the 1.0 threshold and weaker than peer WM (1.1+)
Debt/Equity of 1.16 is manageable but elevated relative to low-leverage peer PCAR (0.82), increasing refinancing risk in high-rate environment
Valuation premium: P/E of 21.64 is below sector average (27.54) but forward P/E of 20.91 on negative earnings growth raises multiple compression risk
AI Fair Value Estimate
Based on comprehensive analysis
$310.0
+9.2% above current price
Performance Snowflake
Multi-dimensional AI analysis across 5 key categories
Stock Price & Analyst Targets
Real-time price movements and analyst price targets
Historical Performance Trends
Long-term financial metrics and growth patterns
Valuation Metrics
Key valuation ratios and pricing indicators
Profitability, Growth & Financial Health
Detailed profit margins, ROE, debt ratios, and liquidity metrics
Sector Comparison & Peer Analysis
Compare NSC against industry averages and similar companies
Insider Trading & Analyst Ratings
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