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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 Q3 2025 Earnings: A Mixed Bag

Norfolk Southern reported revenue of $3.07 billion, a 2% year-over-year growth, but fell short of expectations due to lower intermodal volumes and reduced fuel surcharge revenue. The company's operating ratio was 63.3%, and it earned $3.30 per share, beating estimates of $3.19 per share. Expenses were up 2%, but the company saw strong productivity gains, with a 4% increase in gross ton-miles (GTMs) and 6% fewer qualified T&E.

Publication Date: Oct -24

📋 Highlights
  • Revenue Growth:: Norfolk Southern achieved 2% year-over-year revenue growth to $3.07 billion, though below expectations due to lower intermodal volumes and reduced fuel surcharge revenue.
  • Operating Ratio Improvement:: The company maintained an operating ratio of 63.3%, driven by $500 million in productivity gains over the past two years despite inflationary pressures.
  • Productivity Gains:: Gross ton-miles (GTMs) rose 4% year-over-year, while headcount decreased 3%, resulting in a 7% productivity spread.
  • Fuel Efficiency:: Fuel efficiency improved by 5% year-over-year, contributing to cost discipline amid rising fuel expenses.
  • Land Sales Offset Adverse Impacts:: A $65 million land sale in Q3 neutralized negative effects from merger-related costs ($15 million) and restructuring charges ($12 million).

Operational Performance

The company delivered a quality railroad performance, with improved safety, efficient network operations, and customer solutions. Safety metrics continued to improve, with train accident and employee injury rates decreasing. The network is running well, with stable terminal dwell and car velocity, and fuel efficiency gains. The company has made significant investments in safety, including a wheel detection device that has prevented over 40 derailments.

Cost Structure and Productivity

Norfolk Southern aims to achieve $600 million in cumulative cost takeout by 2026. The company has made significant progress on fuel efficiency and aims to get to best-in-class levels. It has reduced intermodal crew starts by 14% and improved shipments per crew start by 11%. The company guides for a fourth-quarter cost structure in the $2.0 billion to $2.1 billion range, largely due to seasonal increases and the impact of a managed services model in technology.

Revenue Outlook and Challenges

The company expects revenue erosion from competitor reactions, mainly in intermodal, with a focus on domestic non-premium intermodal. The erosion is expected to impact the fourth quarter and first quarter, with a couple of big cycles needed to get the traffic back. The company is confident in its service and value proposition, with a strong product and a focus on delivering exceptional value to customers.

Valuation and Growth Prospects

With a P/E Ratio of 21.84 and an expected revenue growth rate of 3.7% next year, the company's valuation appears reasonable. The ROE of 19.7% suggests that the company is generating strong returns for shareholders. However, the Net Debt / EBITDA ratio of 2.61 indicates that the company still has some debt to pay off. Analysts will be watching to see if the company can deliver on its cost-cutting targets and improve its operating ratio.

3. NewsRoom

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The Next 3 Years Could Make Or Break Portfolios - Here's My Plan

Dec -02

Source: seekingalpha.com

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Boston Family Office LLC Sells 2,000 Shares of Norfolk Southern Corporation $NSC

Dec -01

Source: defenseworld.net

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Norfolk Southern Corporation (NYSE:NSC) Given Consensus Rating of “Hold” by Analysts

Nov -30

Source: defenseworld.net

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Aviso Financial Inc. Trims Stake in Norfolk Southern Corporation $NSC

Nov -26

Source: defenseworld.net

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AlphaCore Capital LLC Acquires Shares of 617 Norfolk Southern Corporation $NSC

Nov -26

Source: defenseworld.net

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AXQ Capital LP Buys Shares of 2,372 Norfolk Southern Corporation $NSC

Nov -23

Source: defenseworld.net

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Bahl & Gaynor Inc. Sells 195 Shares of Norfolk Southern Corporation $NSC

Nov -23

Source: defenseworld.net

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Here's Why Investors Should Give Norfolk Southern Stock a Miss Now

Nov -17

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
Cummins

A-Score: 5.9/10

Value: 3.5

Growth: 5.7

Quality: 5.6

Yield: 4.0

Momentum: 8.0

Volatility: 8.7

1-Year Total Return ->

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Stock-Card
Paychex

A-Score: 5.8/10

Value: 1.8

Growth: 5.8

Quality: 9.0

Yield: 6.0

Momentum: 3.0

Volatility: 9.3

1-Year Total Return ->

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Stock-Card
Caterpillar

A-Score: 5.6/10

Value: 2.0

Growth: 7.0

Quality: 7.0

Yield: 3.0

Momentum: 7.5

Volatility: 7.3

1-Year Total Return ->

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Stock-Card
Norfolk Southern

A-Score: 5.6/10

Value: 2.7

Growth: 4.7

Quality: 5.7

Yield: 4.0

Momentum: 7.0

Volatility: 9.3

1-Year Total Return ->

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Stock-Card
Union Pacific

A-Score: 5.2/10

Value: 2.5

Growth: 4.8

Quality: 6.4

Yield: 4.0

Momentum: 4.0

Volatility: 9.7

1-Year Total Return ->

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Stock-Card
Wabtec

A-Score: 5.1/10

Value: 2.8

Growth: 6.7

Quality: 6.3

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

294.19$

Current Price

294.19$

Potential

-0.00%

Expected Cash-Flows