NSC - Embedded Expectations Analysis - 2020 04 30
ï€ Norfolk Southern Corporation (NSC:USA) currently trades near corporate averages relative to UAFRS-based (Uniform) earnings, with a 20.8x Uniform P/E. At these levels, the market has expectations for stable, record profitability, but management may be concerned about their operating ratio, strategic plans, and macro environmentï€ Specifically, management may lack confidence in their ability to transform their railroad while improving their service product, sustain their record operating ratio, and carry over business improvements and momentum from their record full year results into 2020 and beyond. Furthermore, they may have concerns about their GDP growth rate expectations and coal price pressures. In addition, management may be concerned about the challenging volume environment, pay rate inflation, and high incentive compensations payouts. Moreover, they may lack confidence in their ability to maximize asset usage, sustain free cash flow, and maintain record train performance and terminal dwell
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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