NSC - Embedded Expectations Analysis - 2020 10 05
Norfolk Southern Corporation (NSC:USA) currently trades near historical highs relative to UAFRS-based (Uniform) earnings, with a 26.3x Uniform P/E. At these levels, the market has expectations for profitability to improve, but management may be concerned about volume declines, production stoppages, and cost reduction initiativesSpecifically, management may lack confidence in their ability to sustain revenues, improve productivity levels, and control costs. Furthermore, they may have concerns about the recovery of the truck competitive merchandise market, as well as their ability to improve overall volume levels despite market disruptions. Management may also lack confidence in their ability to sustain COLI returns, provide their railway customers with a platform of growth, and efficiently replace ties and rails. Moreover, they may have concerns about macroeconomic headwinds, the continued impact of production stoppages, and the repercussions of taking some of the major back shop locomotive maintenance facilities offline
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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