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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Norfolk Southern Corporation (XNYS:NSC) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
NSC
Name:
NORFOLK SOUTHERN CORPORATION (XNYS:NSC)
Sector:
605.00M
Industry:
Railroads
CEO:
Mr. James Squires
Total Employees:
18,100
Our Technological Advancement Rating
Our Rating:
D
Technological advancement compared to industry is -51.03% lower
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF NORFOLK SOUTHERN CORPORATION(NSC) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND RAILROADS INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
239.26
One Month Price Target:
$241.02
Six Month Price Target :
$249.83
Likely Price in One Year's Time:
Ticker:
$260.4
Likely Trading Range Today Under (Normal Volatility)
$238.5
Price Upper limit ($) :
$240.29
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$228.57
This week:
$215.35
This month :
$191.44
Other Primary facts
Market Cap:
56.35B
Market Cap Classification:
Large Cap
Number of Shares
IPO Date:
234.87M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
17.96%
-13.9%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$288.86
$266.01
$189.66
$212.51
Medium risk (<10%) entry points
Buy Call
Sell Call
$258.57
Buy Put:
Sell Put:
$253.69
$219.89
$224.83
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
NSC
Sharpe Ratio:
2.19%
Comparison:
NSC, is amongst the top 40% stocks with highest risk-adjusted returns
Sharpe ratio is -0.71% lower than the industry
& is -4.00% lower than the market/S&P 500 average
Average Returns/Yield of
NSC
Daily returns:
0.06%
Weekly returns:
0.29%
Monthly returns:
1.14%
Yearly returns:
13.71%
Comparison of returns:
Average annual returns/yield (last 3 years) is -0.06% below industry average
Classification:
NSC, is amongst the top 40% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.23
Statistical test of Returns:
NSC has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
2.20%
Weekly Volatility:
4.93%
Monthly Volatility:
9.86%
Yearly Volatility:
34.14%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
1.03%
Volatility in last five trading days has been -53.28% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-4.47%
Weekly VaR:
-9.99%
Monthly VaR:
-19.99%
How Much Can the price of
NSC
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-17%
Worst case (decline):
-69.23%
This translates to price declining to:
$198.54
This translates to price declining to:
$73.61
Severe Crash Probability
Risk of crash in next 6/12 months: Medium (<50%)
What is Value at Risk (VaR)?
Risk Fundamentals
NSC is a 41.06% riskier investment compared to the market/S&P 500 & is 20.85% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is -0.53% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
NSC
Beta in relation to market/S&P 500--1.32
Expected beta in 1 year's time:
0.799
Expected beta in 3 year's time:
1.131
Unlevered (debt free) Beta:
0.736
Beta in relation to Nasdaq (XNAS):
0.751
Beta in relation to all global stocks::
0.888
Beta Comparison & Analysis
Beta of competitors/peers::
0.964
Beta is 36.39% higher than peers
Average Industry Beta:
1.292
Beta is 1.75% above industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
13.78%
Sustainable growth rate is -14.04% below industry average
Alpha provided | Alpha Analysis
Alpha provided:
0.015
Alpha is -9.61% below industry average alpha yield
Alpha is 98% compared to market & is healthy
Analysis of Cost of Capital of
NSC
Equity cost of capital:
0.122
Equity cost of capital is 1.29% above industry mean WACC
Unlevered (without debt) cost of capital:
6.81%
Before-tax cost of debt:
4.43%
After-tax cost of debt:
3.50%
Overall debt rating:
Lower BB medium grade (Fifth highest grade)
Weighted average cost of capital (WACC):
3.50%
WACC is 2.46% above industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$48.61
Revenue growth rate per share of (3Y):
4.17
Annual revenue growth rate is 76.18% above the industry average
EPS:
$12.38
Expected Annual growth rate of EPS (3Y):
4.69%
Expected future EPS growth rate is -40.52% lower than the Railroads industry
Free cash flow (FCF) per share:
$10.97
Balance sheet equity growth per share: 33.12%
Equity growth rate per share is 46.41% higher than the industry
Debt per share
$58.29
EBITDA per share
$24.58
Valuation Analysis Today of
NSC
P/E Ratio:
19.06
P/E Ratio of Competitors/Peers:
23.31
P/E ratio is -18.21% lower than main peers & is -10.33% lower than the industry
Stock price/value with industry average P/E ratio: $263.20
NSC is -9.10% undervalued if valued using industry average P/E ratio
Share value as per dividend discount (DDM) model: $64.02
Present value of the expected future dividends only: $51.91
P/S (Price to Sales ratio):
4.92
Price to sales ratio is -5.20% below the industry mean
P/B (Price to book value ratio):
4.17
Price to free cash flow: 21.81
Price to free cash flow ratio is -0.18% lower than the industry
Net income growth rate (3Y):
23.19%
Net income growth rate is 43.45% higher than the average industry net income growth rate
Dividend Analysis
Dividend payout rate: 9.79%
Dividend yeild: 1.95%
Previous Dividend: $1.24
Previous adjusted dividend: $1.24
Previous Dividend: $4.66
Expected next dividend best case: $1.34
Expected next dividend worst case: $1.14
Average dividend payment (long-term): $1.03
Average dividend increase/decrease (growth rate) % per period: 2.92%
Expected next dividend payment date: 18/08/2022
Expected next dividend record date: 08/04/2022
Expected next dividend declaration date: 25/07/2022
Previous dividend payment date: 20/05/2022
Previous dividend record date: 05/06/2022
Previous dividend declaration date: 26/04/2022
Dividend History:
2022-05-05--$1.24
2021-11-04--$1.09
2021-05-06--$0.99
2022-02-03--$1.24
2021-08-06--$1.09
2021-02-04--$0.99
Dividend growth rate is -49.72% lower than the industry average
In-depth Debt & Leverage Analysis
Debt to equity ratio:
101.71%
Net debt to equity ratio:
98.60%
Debt to assets ratio:
34.78%
Net debt to assets ratio:
33.72%
Debt-to-asset ratio is -45.11% below industry average
Ability to repay debt:
Interest coverage ratio:
8.77
Interest coverage ratio is 10.57% more than industry average
Looking forward:
Debt growth rate:
5.54%
Annual debt growth is 110% higher than industry average debt growth rate
Debt repayment rate in last quarter: 0.01%
Analysis of Key Statistics
Correlation of price movement with the market:
0.762
Statistical significance of correlation:
NSC has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.743
Stock price is 2.56% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.743
Correlation of price movement with Nasdaq (^IXIC):
0.002
Covariance of price movement with the market:
0.003
Kurtosis
12.326
Returns have severe fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are considerably more likely, compared to assets with normally distributed returns
Skewness of returns:
0.102
Returns are, approximately, symmetrical
Fundamental Analysis & Dupont Analysis of
NSC
Gross Profit Margin Ratio:
171%
Operating Profit Margin Ratio:
39.56%
Operating profit margin is 70.25% higher than the industry
Net Profit Margin Ratio:
171%
Effective Tax Rate:
22.66%
Effective tax rate is -4.92% lower than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
22.55%
Return on equity (ROE) is -8.59% lower than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
7.71%
Return on assets (ROA) is 3.20% higher than the industry
Financial Leverage:
1.5x
Current Ratio:
0.96
Current ratio is -15.77% below industry average
Cash Conversion Cycle (days):
-42.7
Cash conversion cycle is -178.55% below industry average
The remaining useful life of property plant & equipment is: 0.1 years
Stock based compensation to net income ratio:
-
In-depth Efficiency Analysis
Revenue generated per employee:
630.8K
Each employee generates 10% more revenue than industry average revenue per employee
EBITDA generated per employee:
319.0K
Each employee generates 15% more EBITDA than industry average revenue per employee
Profit generated per employee:
167.7K
Each employee generates 12% more net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
33.4K
Each employee generates 3% more free cash flow than industry average revenue per employee
Assets/Capital per employee
2.0M
Each employee generates 3% more free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
-
Competitors/Peer firms of
NSC
CANADIAN PACIFIC RAILWAY LIMITED (XNYS:CP)
FEDEX CORPORATION (XNYS:FDX)
WASTE MANAGEMENT, INC. (XNYS:WM)
EATON CORPORATION PUBLIC LIMITED COMPANY (XNYS:ETN)
NORTHROP GRUMMAN CORPORATION (XNYS:NOC)
GENERAL DYNAMICS CORPORATION (XNYS:GD)
Canadian National Railway Company (XNYS:CNI)
EMERSON ELECTRIC CO. (XNYS:EMR)
JOHNSON CONTROLS INTERNATIONAL PLC (XNYS:JCI)
Current Analyst Ratings
Strong buy�17%
Buy�17%
Hold�71%
Sell�8%
Strong sell�0%
Overall analyst sentiment is: Hold
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
11.42B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
6.53B
4.89B
-
-
-
-
225.00M
225.00M
-
658.00M
1.19B
5.77B
4.52B
3.04B
3.92B
889.00M
3.04B
Statement of Cash Flow
Date:
Period:
302.00M
Differed Income Tax :
48.00M
Stock Based Compensation :
-
Change in Working Capital :
- 36000.00K
Accounts Receivables:
- 94000.00K
Other Working Capital:
-
Other Non-Cash Items:
- 23000.00K
Net Cash Provided by Operating Activities:
994.00M
Investments in PP&E:
- 389000.00K
Net Acquisitions:
-
Purchases of Investments:
- 1000.00K
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
3/31/22
2022
Q1
1.57B
-
1.57B
1.07B
264.00M
110.00M
3.02B
31.66B
-
-
3.70B
-
992.00M
36.35B
-
39.36B
1.18B
1.15B
443.00M
-
813.00M
3.15B
13.69B
1.85B
22.75B
-
25.90B
240.00M
11.41B
- 394000.0K
-
March 31, 2022 at 6:00:00 AM
6.75B
13.46B
39.36B
-
14.84B
13.3B
19.00M
36.00M
- 335000.00K
- 1000.00K
-
- 618000.00K
- 297000.00K
989.00M
73.00M
-
732.00M
1.57B
839.00M
994.00M
- 389000.00K
605.00M
Our Proprietary Portfolio Rating
Our Rating:
D
Price Forecast/Expected Price in Next 5 Years of
NSC
2023
2024
2025
2026
2027
$300.04
$326.55
$355.41
$386.82
$421.01