Norfolk Southern Corporation (NSC)
Valuation Overview•Is Norfolk Southern Corporation Overvalued or Undervalued?
Trading at a relative discount to industry peers, suggesting a specific risk premium is applied.
Moderate quality score of 68/100, reflecting stable operating margins and manageable leverage.
Analysts remain bullish, forecasting further upside expansion with consensus targets suggesting solid gains.
Verdict: Solid fundamental quality, though solvency presents a headwind.
Wall Street is broadly bullish, projecting solid upside. This is paired with healthy capital returns, anchored by a strong, well-covered dividend yield.
NSC demonstrates strong business quality with robust profitability and healthy margins. However, the balance sheet carries elevated leverage, requiring careful monitoring of debt servicing capabilities.
The company is facing top-line contraction (-1.5% 3Y CAGR) however, earnings have severely contracted over the same period. This growth is supported by elite operational efficiency, sustaining an impressive 32.4% operating margin.
| Financial Metric | Trend (12Q) | Latest Qtr | 1Y Growth | 3Y CAGR | 5Y CAGR | 10Y CAGR |
|---|---|---|---|---|---|---|
| Revenue | $3.0B | +0.5% | -1.5% | +4.5% | +1.5% | |
| EBITDA | $877.0M | — | -3.2% | — | — | |
| Net Income | $547.0M | +9.6% | -4.2% | — | +6.3% | |
| EPS (Diluted) | $2.43 | +10.2% | -2.8% | +10.2% | +9.6% | |
| Free Cash Flow | $344.0M | +29.1% | -1.7% | +0.1% | — |
| Metric | TTM | 3Y Avg | 5Y Avg | 10Y Avg |
|---|---|---|---|---|
| Gross Margin | 51.1% | 32.2% | 34.6% | 34.1% |
| Operating Margin | 32.4% | 29.0% | 32.7% | 33.2% |
| Net Margin | 21.9% | 20.1% | 22.6% | 24.9% |
| FCF Margin | 34.5% | 12.8% | 16.2% | 16.1% |
| Quarter | EPS Est. | EPS Act. | Surprise | EPS | Rev |
|---|---|---|---|---|---|
| Q2'26Latest | $2.49 | $2.65 | +6.4% | ||
| Q1'26 | $2.76 | $3.22 | +16.7% | ||
| Q4'25 | $3.19 | $3.30 | +3.4% | ||
| Q3'25 | $3.31 | $3.29 | -0.6% | ||
| Q2'25 | $2.66 | $2.69 | +1.1% | ||
| Q1'25 | $2.94 | $3.04 | +3.4% | ||
| Q4'24 | $3.11 | $3.25 | +4.5% | ||
| Q3'24 | $2.86 | $3.06 | +7.0% |
Total return is +20.8% (1Y), lagging the benchmark by -4.2%
| Period | Total Return | vs S&P 500 (Alpha) | Dividend Contribution |
|---|---|---|---|
| YTD | +5.2% | -4.1% | — |
| 1Y | +20.8% | -4.2% | +2.1% |
| 3YCAGR | +12.8% | -6.7% | +7.4% |
| 5YCAGR | +4.5% | -8.4% | +10.0% |
| 10YCAGR | +14.9% | +1.3% | — |
The S&P 500 is at 31.3x trailing P/E — Expensive relative to historical averages.
Quick answers to common questions about Norfolk Southern Corporation (NSC) valuation, health, and returns.
Norfolk Southern Corporation is estimated to be fair under our discounted cash flow framework. relative multiples indicate the stock is Slightly cheap versus peers compared to industry peers. trading near fair value (DCF: $252.75)
Norfolk Southern Corporation has multiple valuation anchors: DCF Intrinsic Value: $252.75 | Peer Relative Fair Value: $326.02 | Wall Street Analyst Target: $335.57 (implying +11.8% upside). A convergence of these signals offers higher conviction.
Norfolk Southern Corporation displays good financial health with a composite quality score of 68/100, supported by a Altman Z-Score of 1.6 (distress zone), Piotroski F-Score of 7/9, Return on Invested Capital (ROIC) of 9.8%.
Norfolk Southern Corporation pays a 1.8% dividend yield, covered by a 42% payout ratio with 0 years of growth, supplemented by a 0.8% buyback yield.
Norfolk Southern Corporation's current growth trajectory is Stable. The company achieved +0.5% 1Y revenue growth and +10.2% 1Y EPS growth, compared to its 3Y revenue CAGR of -1.5%.
Wall Street consensus is Hold based on 48 analysts, beating EPS expectations in 58% of recent quarters with a 3-quarter streak. The consensus price target represents a +11.8% change from current levels.
Investment risks for Norfolk Southern Corporation include: -12.5% 1-year max drawdown, elevated distress risk. Volatility risk is characterized by a beta of 0.38x.
No. These computations are purely quantitative model outputs for informational purposes. They do not account for qualitative management shifts or macro events. Always consult a licensed RIA before buying or selling shares.
Disclaimer: This page is for informational purposes only and does not constitute financial advice. All valuation models, scores, and target estimates are automated computations under stated assumptions and should not be relied upon as the sole basis for any investment decision.