NSC - Embedded Expectations Analysis - 2018 10 17
Norfolk Southern Corporation (NSC) currently trades near recent averages relative to UAFRS-based (Uniform) Earnings, with a 20.5x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management has concerns about their ability to sustain peak net income levels, increase their efficiency, and their locomotive conversion programSpecifically, management may lack confidence in their ability to maintain current operating income growth levels, and may be concerned about the short-term transactional bids they made in Q2. Additionally, they may lack confidence in their ability to continue generating revenue growth in all seven of their commodity groups, especially their merchandise segment
Moreover, they may lack confidence in their ability to maintain historically high net income levels, and to increase their efficiency going forward. Also, they may lack confidence in their ability to find growth opportunities in the market. Furthermore, they may be concerned about the effectiveness and financial implications of their DC to AC locomotive conversion program, and about the progress of their service recovery plan. Finally, they may be exaggerating the scope of changes they have made to their operations
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.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.