Stock of the Day

October 10, 2022

Norfolk Southern (NSC)

$247.84
-$1.57 (-0.6%)
Market Cap: $56.47B

About Norfolk Southern

Norfolk Southern Corporation, together with its subsidiaries, engages in the rail transportation of raw materials, intermediate products, and finished goods in the United States. The company transports agriculture, forest, and consumer products comprising soybeans, wheat, corn, fertilizers, livestock and poultry feed, food products, food oils, flour, sweeteners, ethanol, lumber and wood products, pulp board and paper products, wood fibers, wood pulp, beverages, and canned goods; chemicals consist of sulfur and related chemicals, petroleum products comprising crude oil, chlorine and bleaching compounds, plastics, rubber, industrial chemicals, chemical wastes, sand, and natural gas liquids; metals and construction materials, such as steel, aluminum products, machinery, scrap metals, cement, aggregates, minerals, clay, transportation equipment, and military-related products; and automotive, including finished motor vehicles and automotive parts, as well as coal. It also transports overseas freight through various Atlantic and Gulf Coast ports; and operates an intermodal network. As of December 31, 2023, the company operated approximately 19,100 route miles in 22 states and the District of Columbia. Norfolk Southern Corporation was incorporated in 1980 and is headquartered in Atlanta, Georgia.

Norfolk Southern Bull Case

Here are some ways that investors could benefit from investing in Norfolk Southern Co.:

  • Strong quarterly earnings: Norfolk Southern Co. reported earnings per share of $3.04, exceeding analysts' expectations of $2.97, indicating robust financial performance.
  • Attractive dividend yield: The company declared a quarterly dividend of $1.35, translating to an annualized yield of 2.13%, which can provide a steady income stream for investors.
  • High return on equity: With a return on equity of 20.04%, Norfolk Southern Co. demonstrates effective management and profitability, which can be appealing to investors looking for efficient capital use.
  • Positive analyst ratings: The stock has received multiple "buy" ratings from analysts, with an average target price of $276.11, suggesting potential for price appreciation.
  • Current stock price: As of the latest trading session, Norfolk Southern Co. is priced at $255.90, which may be considered a reasonable entry point for new investors.

Norfolk Southern Bear Case

Investors should be bearish about investing in Norfolk Southern Co. for these reasons:

  • High debt-to-equity ratio: With a debt-to-equity ratio of 1.16, the company may be seen as having a higher risk due to its reliance on debt financing, which can impact financial stability.
  • Lower liquidity ratios: The quick ratio of 0.82 and current ratio of 0.90 indicate potential liquidity issues, suggesting that the company may struggle to meet short-term obligations.
  • Mixed analyst price targets: While some analysts have raised their price targets, others have lowered them, indicating uncertainty in the stock's future performance.
  • Market volatility: With a beta of 1.35, Norfolk Southern Co. is more volatile than the market, which could lead to larger price swings and increased risk for investors.
  • Recent downgrade: Loop Capital recently downgraded the stock from a "buy" to a "hold" rating, which may signal caution for potential investors.

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