NSC - Embedded Expectations Analysis - 2018 04 03
Norfolk Southern Corporation (NSC:USA) currently trades at historical highs relative to UAFRS-based (Uniform) Assets, with a 1.6x Uniform P/B, implying bullish expectations for the firm. However, management has concerns about productivity, guidance, and their networkSpecifically, management may lack confidence in the sustainability of record results going forward as well as the sustainability of further improvements in key productivity initiatives. In addition, they may lack confidence in their ability to deliver on their proposed dividend ratio, operating ratio, and productivity performance, and may have concerns about the costs of additional chassis in their supply chain. Finally, they may lack confidence in their ability to maximize the returns of reinvestment into the network going forward, and may be downplaying concerns about the health of their network
Norfolk Southern is a holding company. Through its subsidiaries, the company is engaged in the rail transportation of raw materials, intermediate products, and finished goods primarily in the Southeast, East, and Midwest and, via interchange with rail carriers, to and from the rest of the United States. The company also transports overseas freight through several Atlantic and Gulf Coast ports. The company provides intermodal network in the eastern half of the United States. The company's railroad operates in several states and the District of Columbia. The company's system reaches manufacturing plants, electric generating facilities, mines, distribution centers, transload facilities, and other businesses in its service area.
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