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1. Company Snapshot

1.a. Company Description

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, scrap paper, beverages, canned goods, and consumer products; chemicals consist of sulfur and related chemicals, petroleum products, chlorine and bleaching compounds, plastics, rubber, industrial chemicals, chemical wastes, and sand; 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 provides commuter rail passenger transportation services and operates an intermodal network.


As of December 31, 2021, the company operated approximately 19,300 route miles in 22 states and the District of Columbia.Norfolk Southern Corporation was incorporated in 1980 and is based in Atlanta, Georgia.

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1.b. Last Insights on NSC

Norfolk Southern Corporation's recent performance was driven by strong Q2 earnings, with net income and EPS growth of 4% and 5%, respectively. The company's revenue was $3.1 billion, with an operating ratio of 62.2%. A proposed $85 billion acquisition by Union Pacific Corporation, announced on July 29, 2025, has garnered support from the United States' largest railroad union, SMART, after securing job protection guarantees. Additionally, Union Pacific CEO Jim Vena expressed confidence in receiving merger approval from the U.S. administration.

1.c. Company Highlights

2. Norfolk Southern's Q4 2025 Earnings: A Resilient Performance

Norfolk Southern reported a resilient fourth-quarter 2025 performance, with earnings per share (EPS) of $3.22, beating estimates of $2.76. Revenue declined 2% year-over-year to $3.04 billion, driven by a 4% volume decline, partially offset by a 2% increase in revenue per unit. The operating ratio improved to 65.3%, and the company's net income grew by 5% compared to the previous year. The company's free cash flow generation was robust, at $2.2 billion, a $500 million increase over the prior year.

Publication Date: 08:03

📋 Highlights
  • Safety Milestones: Zero mainline derailments, 15% improvement in FRA injury ratio (1.0), and 31% fewer reportable accidents (2.19) in Q4 2025.
  • Cost Efficiency: Achieved $216M in 2025 savings, surpassing targets, with 2026 savings commitment raised to $150M and operating ratio at 65.3%.
  • Financial Performance: EPS grew $0.22 to $3.22, net income increased $50M, and free cash flow rose $500M to $2.2B in 2025.
  • Revenue Mix: Merchandise revenue (up 2%) offset intermodal (down 6%) and coal (down 11%) declines, driven by lower seaborne coal prices.

Operational Highlights

The company achieved significant operational improvements, including a 15% reduction in FRA reportable injury ratio and a 31% improvement in reportable accidents. Norfolk Southern's PSR 2.0 transformation drove these safety and service enhancements. The company also delivered $216 million in productivity gains in 2025, exceeding its target, and is raising its 2026 cost takeout savings commitment to $150 million.

Segment Performance

Merchandise revenue less fuel grew 2% year-over-year, while intermodal revenue declined 6%. Coal revenue was down 11% due to lower seaborne coal prices. The company's merchandise business showed strength, with growth in business and yields, and it plans to remain disciplined and fight for quality revenue.

Outlook and Valuation

The company expects its cost base to be in the range of $8.2 billion to $8.4 billion in 2026. With a current P/E Ratio of 22.8 and an EV/EBITDA of 13.84, the market appears to be pricing in a moderate growth trajectory. Analysts estimate next year's revenue growth at 4.7%. The company's focus on safety, service, and cost control, combined with its robust free cash flow generation, positions it well for future growth.

Merger Update

The company is working closely with UP to resubmit its merger application to the STB, following a decision based on completeness, not merits. Norfolk Southern is confident in its ability to address the STB's concerns and remains committed to the merger.

3. NewsRoom

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Norfolk Southern rail fuels more than $7.7B in industrial development activity in 2025

Feb -02

Source: prnewswire.com

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Norfolk Southern Corporation $NSC Shares Purchased by Atlantic Union Bankshares Corp

Feb -02

Source: defenseworld.net

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AE Wealth Management LLC Buys 4,238 Shares of Norfolk Southern Corporation $NSC

Feb -01

Source: defenseworld.net

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Norfolk Southern Corp (NSC) Q4 2025 Earnings Call Highlights: Navigating Challenges with Operational Efficiency and Strategic Growth

Jan -29

Source: gurufocus.com

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Norfolk Southern Q4 Earnings Top Estimates, Increase Year Over Year

Jan -29

Source: zacks.com

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Norfolk Southern Corporation (NSC) Q4 2025 Earnings Call Transcript

Jan -29

Source: seekingalpha.com

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Norfolk Southern (NSC) Reports Q4 Earnings: What Key Metrics Have to Say

Jan -29

Source: zacks.com

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Norfolk Southern (NSC) Beats Q4 Earnings Estimates

Jan -29

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.70%)

6. Segments

Transportation - Railroads

Expected Growth: 4.7%

Norfolk Southern Corporation’s rail transportation services will likely benefit from increasing demand for coal and natural gas transportation, as well as the growing importance of rail in the supply chain. Additionally, investments in infrastructure and technology will drive efficiency gains, leading to a forecast CAGR of 4.7%.

7. Detailed Products

Intermodal

Norfolk Southern's intermodal service provides door-to-door transportation of goods in containers that can be easily transferred between ships, trains, and trucks.

Coal

Norfolk Southern provides transportation services for coal, a vital source of energy for power generation and industrial processes.

Automotive

Norfolk Southern offers specialized rail services for the automotive industry, including transportation of finished vehicles and auto parts.

Chemicals

Norfolk Southern provides safe and reliable transportation of hazardous and non-hazardous chemicals, including fuels, plastics, and other industrial chemicals.

Metals and Construction

Norfolk Southern offers transportation services for metals, including steel, aluminum, and copper, as well as construction materials like lumber and cement.

Agricultural Products

Norfolk Southern provides transportation services for agricultural products, including grains, soybeans, and fertilizers.

Forest Products

Norfolk Southern offers transportation services for forest products, including lumber, paper, and wood pulp.

8. Norfolk Southern Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Norfolk Southern Corporation is medium due to the availability of alternative modes of transportation such as trucks and airplanes. However, the high cost of switching to these alternatives and the lack of a comprehensive network limit the threat.

Bargaining Power Of Customers

The bargaining power of customers is low due to the lack of concentration in the industry. Norfolk Southern Corporation has a diverse customer base, which reduces the bargaining power of individual customers.

Bargaining Power Of Suppliers

The bargaining power of suppliers is medium due to the presence of a few large suppliers of fuel and equipment. However, Norfolk Southern Corporation's large scale of operations and diversified supplier base mitigate the bargaining power of suppliers.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the railroad industry. The high capital requirements, regulatory hurdles, and complexity of building a railroad network make it difficult for new entrants to enter the market.

Intensity Of Rivalry

The intensity of rivalry is high due to the presence of a few large players in the industry. Norfolk Southern Corporation competes with other major railroads such as Union Pacific and CSX, which leads to intense competition for market share and customers.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 57.89%
Debt Cost 5.22%
Equity Weight 42.11%
Equity Cost 10.44%
WACC 7.42%
Leverage 137.48%

11. Quality Control: Norfolk Southern Corporation passed 1 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Paychex

A-Score: 6.0/10

Value: 2.1

Growth: 5.8

Quality: 9.0

Yield: 7.0

Momentum: 2.5

Volatility: 9.3

1-Year Total Return ->

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Stock-Card
Cummins

A-Score: 5.7/10

Value: 2.6

Growth: 5.6

Quality: 5.8

Yield: 4.0

Momentum: 8.5

Volatility: 8.0

1-Year Total Return ->

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Stock-Card
Caterpillar

A-Score: 5.7/10

Value: 2.0

Growth: 6.9

Quality: 6.2

Yield: 3.0

Momentum: 8.5

Volatility: 7.3

1-Year Total Return ->

View Full Report
Stock-Card
Norfolk Southern

A-Score: 5.6/10

Value: 2.7

Growth: 4.7

Quality: 5.8

Yield: 4.0

Momentum: 7.0

Volatility: 9.7

1-Year Total Return ->

View Full Report
Stock-Card
Union Pacific

A-Score: 5.5/10

Value: 2.8

Growth: 4.9

Quality: 6.5

Yield: 4.0

Momentum: 5.0

Volatility: 10.0

1-Year Total Return ->

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Stock-Card
Wabtec

A-Score: 5.1/10

Value: 2.9

Growth: 6.6

Quality: 6.6

Yield: 0.0

Momentum: 6.0

Volatility: 8.7

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

297.45$

Current Price

297.45$

Potential

-0.00%

Expected Cash-Flows