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Norfolk Southern
(NYSE:NSC)
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Rating:70Outperform
Price Target:
$386.00
â–²(10.08% Upside)
Action:Reiterated
Date:07/27/26
NSC scores well primarily on resilient financial performance (strong margins and improving free-cash-flow generation) and a clearly positive price trend (trading above key moving averages). The main offsets are valuation risk (high P/E with a modest yield) and near-term margin uncertainty highlighted on the earnings call due to fuel-driven opex pressure, even as management points to operational improvements and cost-takeout plans.
Positive Factors
High margins
Norfolk Southern’s elevated TTM margins indicate durable pricing power and network density advantages versus many freight alternatives. High margins support reinvestment, dividends and resilience to moderate volume swings, underpinning longer-term profitability even through cycles.
Negative Factors
Meaningful leverage
Leverage near 1.0x equity is typical for rails but constrains financial flexibility for large shocks or aggressive capital deployment. Higher debt increases interest sensitivity and limits rapid balance-sheet moves, making deleveraging or opportunistic investments harder if cash flow weakens.
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Positive Factors
Negative Factors
High margins
Norfolk Southern’s elevated TTM margins indicate durable pricing power and network density advantages versus many freight alternatives. High margins support reinvestment, dividends and resilience to moderate volume swings, underpinning longer-term profitability even through cycles.
Read all positive factors
Norfolk Southern Key Performance Indicators (KPIs)
Any
Revenue by Segment
Shows revenue generated from different business segments, highlighting which areas are driving growth and profitability, and helping assess the company's strategic focus and market position.
Shows revenue generated from different business segments, highlighting which areas are driving growth and profitability, and helping assess the company's strategic focus and market position.
Data provided by:
The Fly
The FlyNorfolk Southern (NSC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$75.35B
Dividend Yield1.61%
Average Volume (3M)1.07M
Price to Earnings (P/E)28.6
Beta (1Y)0.69
Revenue Growth2.97%
EPS Growth-20.83%
CountryUS
Employees19,300
SectorIndustrials
Sector Strength72
IndustryRailroads
Share Statistics
EPS (TTM)11.72
Shares Outstanding224,608,370
10 Day Avg. Volume1,198,888
30 Day Avg. Volume1,074,697
Financial Highlights & Ratios
PEG Ratio2.24
Price to Book (P/B)4.17
Price to Sales (P/S)5.33
P/FCF Ratio30.09
Enterprise Value/Market Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda<0.01
Forecast
1Y Price Target
$365.15Price Target Upside4.13% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering15
EPS Forecast (FY)12.88
Revenue Forecast (FY)$13.19B
Norfolk Southern Business Overview & Revenue Model
Company Description
Norfolk Southern Corporation (NSC), operating through its various subsidiaries, is a prominent rail transport provider in the United States. The company's core business involves the conveyance of raw materials, semi-finished goods, and completed m...
How the Company Makes Money
Norfolk Southern primarily makes money by charging customers to move freight by rail across its network. Its revenue is generated through rail freight transportation and related service charges, generally priced based on factors such as shipment t...
Norfolk Southern Earnings Call Summary
Earnings Call Date:Jul 23, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Oct 28, 2026
Earnings Call Sentiment Positive
The call conveyed a cautiously optimistic and constructive tone: results exceeded expectations with solid volume, revenue and earnings growth, meaningful operational and safety improvements, and proactive cost and capital discipline. These positives were tempered by significant fuel and inflationary cost headwinds, an elevated operating expense outlook driven primarily by fuel, some earlier network/service variability, and macro uncertainties. Management emphasized tangible operational progress (e.g., originations +20%, safety improvements, cost-takeout targets) and a path to capitalize on freight market strength while acknowledging near-term margin pressures.Positive Updates
Revenue and Earnings Growth
Net income and EPS grew 7% year-over-year; operating income increased 5% year-over-year; adjusted earnings per share were $3.52 for the quarter (after $51M merger-related, $15M Eastern Ohio incident, and $6M restructuring expenses).
Negative Updates
Fuel and Inflationary Cost Headwinds
Fuel was a major headwind in Q2: costs rose materially (management estimated $400–$500 million of incremental fuel expense vs. beginning-of-year expectations) and contributed roughly 110 basis points of operating ratio headwind; inflationary pressures were cited as an additional ~190 basis point headwind year-over-year.
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Q2-2026 Updates
Positive
Negative
Revenue and Earnings Growth
Net income and EPS grew 7% year-over-year; operating income increased 5% year-over-year; adjusted earnings per share were $3.52 for the quarter (after $51M merger-related, $15M Eastern Ohio incident, and $6M restructuring expenses).
Read all positive updates
Company Guidance
The company updated 2026 guidance, raising full‑year operating expense to $8.8–$8.9 billion (from $8.2–$8.4B) to reflect an estimated $400–$500 million incremental fuel headwind, while keeping CapEx at approximately $1.9 billion; management reiterated at least $150 million of cost takeout for 2026 (≥$650 million cumulative over three years) and said core operating costs are tracking toward the high end of the prior range due to stronger volumes. Q2 adjusted results included a 65.5% operating ratio and $3.52 EPS after $51M of merger, $15M Eastern Ohio, and $6M restructuring charges; year‑over‑year the operating ratio widened ~210 bps (with ~110 bps from fuel and ~190 bps from inflation), costs were up ~15% (over two‑thirds from fuel), operating income rose 5% and net income/EPS rose 7%. Management expects fuel to flip to a sequential tailwind in Q3 (partly offset by a ~4% wage increase effective July) and said they can beat normal Q2→Q3 seasonality—historically flat to ~50 bps worse—by as much as ~100 bps.Norfolk Southern Financial Statement Overview
Summary
Income Statement
74
Positive
Balance Sheet
63
Positive
Cash Flow
70
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 12.54B | 12.18B | 12.12B | 12.16B | 12.74B | 11.14B |
| Gross Profit | 6.73B | 5.17B | 3.76B | 2.81B | 4.73B | 4.37B |
| EBITDA | 5.42B | 5.85B | 5.49B | 4.34B | 6.04B | 5.71B |
| Net Income | 2.64B | 2.87B | 2.62B | 1.83B | 3.27B | 3.00B |
Balance Sheet | ||||||
| Total Assets | 45.12B | 45.24B | 43.68B | 41.65B | 38.88B | 38.49B |
| Cash, Cash Equivalents and Short-Term Investments | 1.07B | 1.53B | 1.64B | 1.57B | 456.00M | 839.00M |
| Total Debt | 16.62B | 17.09B | 17.48B | 17.57B | 15.59B | 14.25B |
| Total Liabilities | 28.87B | 29.69B | 29.38B | 28.87B | 26.15B | 24.85B |
| Stockholders Equity | 16.25B | 15.55B | 14.31B | 12.78B | 12.73B | 13.64B |
Cash Flow | ||||||
| Free Cash Flow | 3.83B | 2.16B | 1.67B | 830.00M | 2.27B | 2.79B |
| Operating Cash Flow | 3.73B | 4.36B | 4.05B | 3.18B | 4.22B | 4.25B |
| Investing Cash Flow | -1.76B | -2.56B | -2.78B | -2.18B | -1.60B | -1.22B |
| Financing Cash Flow | -2.21B | -1.91B | -1.20B | 115.00M | -3.00B | -3.31B |
Norfolk Southern Risk Analysis
Norfolk Southern disclosed 29 risk factors in its most recent earnings report. Norfolk Southern reported the most risks in the "Production" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Norfolk Southern Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $93.36B | 29.13 | 24.06% | 1.01% | 2.52% | 6.32% | |
72 Outperform | $25.52B | 38.60 | 18.75% | 0.62% | 5.28% | 28.24% | |
70 Outperform | $75.35B | 28.62 | 16.80% | 1.54% | 2.97% | -20.83% | |
69 Neutral | $72.73B | 16.74 | 15.11% | 1.50% | 7.73% | 10.07% | |
69 Neutral | $173.55B | 23.62 | 38.65% | 1.80% | 4.17% | 7.24% | |
68 Neutral | $88.59B | 19.34 | 29.07% | 5.71% | -0.19% | -19.99% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% |
* Industrials Sector Average
NSC
Norfolk Southern
341.74
62.59
22.42%
CSX
CSX
51.12
15.61
43.97%
FDX
FedEx
310.72
131.85
73.72%
JBHT
JB Hunt
272.66
130.52
91.83%
UNP
Union Pacific
295.54
75.09
34.06%
UPS
United Parcel
107.70
27.00
33.46%
Norfolk Southern Corporate Events
Business Operations and StrategyFinancial Disclosures
Norfolk Southern Posts Record Revenue but Lower Profitability
Neutral
Jul 23, 2026
On July 23, 2026, Norfolk Southern reported second-quarter 2026 results that showed record railway operating revenues of $3.5 billion, up 11% year over year on 4% higher volumes and stronger fuel surcharge revenues. Despite the top-line strength, ...
Business Operations and StrategyExecutive/Board ChangesM&A Transactions
Norfolk Southern Names Brian Barr Chief Operating Officer
Positive
Jun 1, 2026
Norfolk Southern has appointed Brian Barr as Chief Operating Officer effective June 1, 2026, succeeding John Orr, who decided to step down from the Executive Vice President and COO role. Barr, who joined Norfolk Southern in September 2024 to lead ...
Executive/Board ChangesShareholder Meetings
Norfolk Southern Shareholders Back Board, Governance at 2026 Meeting
Positive
May 8, 2026
At its 2026 annual meeting of shareholders held on May 7, 2026, Norfolk Southern investors elected twelve directors to one-year terms, with all nominees receiving strong majorities despite some variation in opposition levels. The results indicate ...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.