Intrinsic value of Norfolk Southern - NSC

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$117.49

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$117.49

 
Intrinsic value

$39.61

 
Up/down potential

-66%

 
Rating

str. sell

 
Value-price divergence* premium content

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*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of NSC stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 35.8

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -5.93
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  9,888
  10,086
  10,318
  10,583
  10,881
  11,210
  11,572
  11,967
  12,393
  12,853
  13,346
  13,874
  14,437
  15,036
  15,673
  16,350
  17,066
  17,824
  18,627
  19,474
  20,369
  21,313
  22,309
  23,358
  24,464
  25,629
  26,855
  28,145
  29,504
  30,932
  32,435
Variable operating expenses, $m
 
  7,322
  7,491
  7,683
  7,899
  8,139
  8,402
  8,688
  8,997
  9,331
  9,689
  10,072
  10,481
  10,916
  11,379
  11,870
  12,390
  12,941
  13,523
  14,138
  14,788
  15,473
  16,196
  16,958
  17,761
  18,606
  19,497
  20,434
  21,420
  22,457
  23,548
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  6,818
  7,322
  7,491
  7,683
  7,899
  8,139
  8,402
  8,688
  8,997
  9,331
  9,689
  10,072
  10,481
  10,916
  11,379
  11,870
  12,390
  12,941
  13,523
  14,138
  14,788
  15,473
  16,196
  16,958
  17,761
  18,606
  19,497
  20,434
  21,420
  22,457
  23,548
Operating income, $m
  3,070
  2,763
  2,827
  2,900
  2,981
  3,072
  3,171
  3,279
  3,396
  3,522
  3,657
  3,801
  3,956
  4,120
  4,295
  4,480
  4,676
  4,884
  5,104
  5,336
  5,581
  5,840
  6,113
  6,400
  6,703
  7,022
  7,358
  7,712
  8,084
  8,476
  8,887
EBITDA, $m
  4,100
  3,815
  3,902
  4,003
  4,115
  4,240
  4,377
  4,526
  4,687
  4,861
  5,048
  5,247
  5,460
  5,687
  5,928
  6,184
  6,455
  6,741
  7,045
  7,365
  7,704
  8,061
  8,437
  8,834
  9,253
  9,693
  10,157
  10,645
  11,159
  11,699
  12,267
Interest expense (income), $m
  0
  335
  351
  368
  389
  412
  437
  465
  496
  529
  565
  603
  643
  687
  733
  783
  835
  890
  949
  1,011
  1,077
  1,146
  1,219
  1,296
  1,377
  1,462
  1,553
  1,647
  1,747
  1,852
  1,963
Earnings before tax, $m
  2,582
  2,429
  2,477
  2,531
  2,592
  2,660
  2,733
  2,813
  2,900
  2,993
  3,092
  3,199
  3,312
  3,433
  3,561
  3,697
  3,841
  3,994
  4,155
  4,325
  4,504
  4,694
  4,894
  5,104
  5,326
  5,560
  5,806
  6,064
  6,337
  6,623
  6,925
Tax expense, $m
  914
  656
  669
  683
  700
  718
  738
  760
  783
  808
  835
  864
  894
  927
  962
  998
  1,037
  1,078
  1,122
  1,168
  1,216
  1,267
  1,321
  1,378
  1,438
  1,501
  1,568
  1,637
  1,711
  1,788
  1,870
Net income, $m
  1,668
  1,773
  1,808
  1,848
  1,892
  1,942
  1,995
  2,054
  2,117
  2,185
  2,257
  2,335
  2,418
  2,506
  2,600
  2,699
  2,804
  2,915
  3,033
  3,157
  3,288
  3,427
  3,572
  3,726
  3,888
  4,059
  4,238
  4,427
  4,626
  4,835
  5,055

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  956
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  34,892
  34,659
  35,456
  36,367
  37,390
  38,524
  39,768
  41,122
  42,588
  44,168
  45,863
  47,676
  49,611
  51,671
  53,861
  56,184
  58,646
  61,252
  64,009
  66,921
  69,996
  73,240
  76,662
  80,268
  84,068
  88,071
  92,284
  96,720
  101,387
  106,297
  111,462
Adjusted assets (=assets-cash), $m
  33,936
  34,659
  35,456
  36,367
  37,390
  38,524
  39,768
  41,122
  42,588
  44,168
  45,863
  47,676
  49,611
  51,671
  53,861
  56,184
  58,646
  61,252
  64,009
  66,921
  69,996
  73,240
  76,662
  80,268
  84,068
  88,071
  92,284
  96,720
  101,387
  106,297
  111,462
Revenue / Adjusted assets
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
  0.291
Average production assets, $m
  29,372
  29,955
  30,644
  31,431
  32,315
  33,295
  34,370
  35,541
  36,808
  38,173
  39,638
  41,205
  42,877
  44,658
  46,550
  48,558
  50,686
  52,939
  55,321
  57,838
  60,495
  63,299
  66,256
  69,374
  72,658
  76,117
  79,759
  83,592
  87,626
  91,870
  96,333
Working capital, $m
  -48
  -363
  -371
  -381
  -392
  -404
  -417
  -431
  -446
  -463
  -480
  -499
  -520
  -541
  -564
  -589
  -614
  -642
  -671
  -701
  -733
  -767
  -803
  -841
  -881
  -923
  -967
  -1,013
  -1,062
  -1,114
  -1,168
Total debt, $m
  10,212
  10,015
  10,527
  11,113
  11,771
  12,500
  13,300
  14,170
  15,113
  16,129
  17,219
  18,385
  19,629
  20,954
  22,361
  23,855
  25,438
  27,114
  28,887
  30,759
  32,736
  34,822
  37,023
  39,342
  41,785
  44,358
  47,068
  49,920
  52,921
  56,078
  59,399
Total liabilities, $m
  22,483
  22,286
  22,798
  23,384
  24,042
  24,771
  25,571
  26,441
  27,384
  28,400
  29,490
  30,656
  31,900
  33,225
  34,632
  36,126
  37,709
  39,385
  41,158
  43,030
  45,007
  47,093
  49,294
  51,613
  54,056
  56,629
  59,339
  62,191
  65,192
  68,349
  71,670
Total equity, $m
  12,409
  12,373
  12,658
  12,983
  13,348
  13,753
  14,197
  14,681
  15,204
  15,768
  16,373
  17,020
  17,711
  18,447
  19,228
  20,058
  20,937
  21,867
  22,851
  23,891
  24,988
  26,147
  27,368
  28,656
  30,012
  31,441
  32,946
  34,529
  36,195
  37,948
  39,792
Total liabilities and equity, $m
  34,892
  34,659
  35,456
  36,367
  37,390
  38,524
  39,768
  41,122
  42,588
  44,168
  45,863
  47,676
  49,611
  51,672
  53,860
  56,184
  58,646
  61,252
  64,009
  66,921
  69,995
  73,240
  76,662
  80,269
  84,068
  88,070
  92,285
  96,720
  101,387
  106,297
  111,462
Debt-to-equity ratio
  0.823
  0.810
  0.830
  0.860
  0.880
  0.910
  0.940
  0.970
  0.990
  1.020
  1.050
  1.080
  1.110
  1.140
  1.160
  1.190
  1.220
  1.240
  1.260
  1.290
  1.310
  1.330
  1.350
  1.370
  1.390
  1.410
  1.430
  1.450
  1.460
  1.480
  1.490
Adjusted equity ratio
  0.340
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357
  0.357

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,668
  1,773
  1,808
  1,848
  1,892
  1,942
  1,995
  2,054
  2,117
  2,185
  2,257
  2,335
  2,418
  2,506
  2,600
  2,699
  2,804
  2,915
  3,033
  3,157
  3,288
  3,427
  3,572
  3,726
  3,888
  4,059
  4,238
  4,427
  4,626
  4,835
  5,055
Depreciation, amort., depletion, $m
  1,030
  1,051
  1,075
  1,103
  1,134
  1,168
  1,206
  1,247
  1,291
  1,339
  1,391
  1,446
  1,504
  1,567
  1,633
  1,704
  1,778
  1,857
  1,941
  2,029
  2,123
  2,221
  2,325
  2,434
  2,549
  2,671
  2,799
  2,933
  3,075
  3,223
  3,380
Funds from operations, $m
  3,189
  2,824
  2,883
  2,951
  3,026
  3,110
  3,201
  3,301
  3,408
  3,524
  3,648
  3,781
  3,922
  4,073
  4,233
  4,403
  4,583
  4,773
  4,974
  5,187
  5,411
  5,648
  5,897
  6,160
  6,437
  6,729
  7,037
  7,360
  7,700
  8,058
  8,435
Change in working capital, $m
  155
  -7
  -8
  -10
  -11
  -12
  -13
  -14
  -15
  -17
  -18
  -19
  -20
  -22
  -23
  -24
  -26
  -27
  -29
  -31
  -32
  -34
  -36
  -38
  -40
  -42
  -44
  -46
  -49
  -51
  -54
Cash from operations, $m
  3,034
  3,211
  2,891
  2,960
  3,037
  3,122
  3,214
  3,315
  3,424
  3,541
  3,666
  3,800
  3,943
  4,095
  4,256
  4,427
  4,608
  4,800
  5,003
  5,217
  5,443
  5,682
  5,933
  6,198
  6,477
  6,771
  7,081
  7,407
  7,749
  8,110
  8,489
Maintenance CAPEX, $m
  0
  -1,031
  -1,051
  -1,075
  -1,103
  -1,134
  -1,168
  -1,206
  -1,247
  -1,291
  -1,339
  -1,391
  -1,446
  -1,504
  -1,567
  -1,633
  -1,704
  -1,778
  -1,857
  -1,941
  -2,029
  -2,123
  -2,221
  -2,325
  -2,434
  -2,549
  -2,671
  -2,799
  -2,933
  -3,075
  -3,223
New CAPEX, $m
  -1,887
  -583
  -689
  -788
  -884
  -980
  -1,075
  -1,171
  -1,267
  -1,365
  -1,465
  -1,567
  -1,672
  -1,781
  -1,892
  -2,008
  -2,128
  -2,253
  -2,382
  -2,517
  -2,657
  -2,804
  -2,957
  -3,117
  -3,284
  -3,459
  -3,642
  -3,833
  -4,034
  -4,244
  -4,464
Cash from investing activities, $m
  -1,832
  -1,614
  -1,740
  -1,863
  -1,987
  -2,114
  -2,243
  -2,377
  -2,514
  -2,656
  -2,804
  -2,958
  -3,118
  -3,285
  -3,459
  -3,641
  -3,832
  -4,031
  -4,239
  -4,458
  -4,686
  -4,927
  -5,178
  -5,442
  -5,718
  -6,008
  -6,313
  -6,632
  -6,967
  -7,319
  -7,687
Free cash flow, $m
  1,202
  1,597
  1,151
  1,097
  1,050
  1,008
  971
  938
  910
  884
  862
  842
  825
  810
  797
  786
  777
  769
  763
  759
  756
  755
  755
  756
  759
  763
  768
  775
  783
  792
  802
Issuance/(repayment) of debt, $m
  94
  453
  513
  586
  658
  729
  800
  871
  943
  1,016
  1,090
  1,166
  1,244
  1,325
  1,408
  1,494
  1,583
  1,676
  1,772
  1,873
  1,977
  2,086
  2,200
  2,319
  2,443
  2,573
  2,710
  2,852
  3,001
  3,157
  3,321
Issuance/(repurchase) of shares, $m
  -746
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -652
  453
  513
  586
  658
  729
  800
  871
  943
  1,016
  1,090
  1,166
  1,244
  1,325
  1,408
  1,494
  1,583
  1,676
  1,772
  1,873
  1,977
  2,086
  2,200
  2,319
  2,443
  2,573
  2,710
  2,852
  3,001
  3,157
  3,321
Total cash flow (excl. dividends), $m
  550
  2,050
  1,664
  1,683
  1,708
  1,737
  1,771
  1,809
  1,852
  1,900
  1,951
  2,008
  2,069
  2,134
  2,204
  2,280
  2,360
  2,445
  2,536
  2,632
  2,733
  2,841
  2,955
  3,075
  3,202
  3,336
  3,478
  3,627
  3,784
  3,949
  4,123
Retained Cash Flow (-), $m
  -221
  -270
  -285
  -325
  -365
  -405
  -444
  -484
  -523
  -564
  -605
  -647
  -691
  -735
  -782
  -829
  -879
  -930
  -984
  -1,040
  -1,098
  -1,158
  -1,222
  -1,288
  -1,357
  -1,429
  -1,504
  -1,583
  -1,666
  -1,753
  -1,844
Prev. year cash balance distribution, $m
 
  306
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  2,085
  1,379
  1,358
  1,343
  1,332
  1,327
  1,326
  1,329
  1,336
  1,346
  1,360
  1,378
  1,399
  1,423
  1,450
  1,481
  1,514
  1,552
  1,592
  1,636
  1,683
  1,733
  1,788
  1,846
  1,908
  1,973
  2,043
  2,117
  2,196
  2,279
Discount rate, %
 
  6.50
  6.83
  7.17
  7.52
  7.90
  8.30
  8.71
  9.15
  9.60
  10.08
  10.59
  11.12
  11.67
  12.26
  12.87
  13.51
  14.19
  14.90
  15.64
  16.43
  17.25
  18.11
  19.01
  19.96
  20.96
  22.01
  23.11
  24.27
  25.48
  26.75
PV of cash for distribution, $m
 
  1,958
  1,209
  1,103
  1,004
  911
  823
  739
  660
  585
  515
  450
  389
  333
  282
  236
  195
  159
  127
  101
  78
  60
  45
  33
  23
  16
  11
  7
  5
  3
  2
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Norfolk Southern Corporation, together with its subsidiaries, engages in the rail transportation of raw materials, intermediate products, and finished goods in the United States. It also transports overseas freight through various Atlantic and Gulf Coast ports. In addition, the company is involved in the operation of scheduled passenger trains; leasing or sale of rail property and equipment; development of commercial real estate; telecommunications; and the acquisition, leasing, and management of coal, oil, gas, and minerals, as well as the transport of automotive and industrial products. As of February 14, 2017, it operated approximately 19,500 route miles in 22 states and the District of Columbia. The company was founded in 1883 and is based in Norfolk, Virginia.

FINANCIAL RATIOS  of  Norfolk Southern (NSC)

Valuation Ratios
P/E Ratio 20.5
Price to Sales 3.5
Price to Book 2.7
Price to Tangible Book
Price to Cash Flow 11.2
Price to Free Cash Flow 29.7
Growth Rates
Sales Growth Rate -5.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -20.9%
Cap. Spend. - 3 Yr. Gr. Rate -0.9%
Financial Strength
Quick Ratio 1
Current Ratio 0.1
LT Debt to Equity 77.1%
Total Debt to Equity 82.3%
Interest Coverage 0
Management Effectiveness
Return On Assets 4.8%
Ret/ On Assets - 3 Yr. Avg. 5.2%
Return On Total Capital 7.4%
Ret/ On T. Cap. - 3 Yr. Avg. 8%
Return On Equity 13.6%
Return On Equity - 3 Yr. Avg. 14.4%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 44.6%
Gross Margin - 3 Yr. Avg. 42.2%
EBITDA Margin 36.5%
EBITDA Margin - 3 Yr. Avg. 35%
Operating Margin 31%
Oper. Margin - 3 Yr. Avg. 29.7%
Pre-Tax Margin 26.1%
Pre-Tax Margin - 3 Yr. Avg. 25.4%
Net Profit Margin 16.9%
Net Profit Margin - 3 Yr. Avg. 16.3%
Effective Tax Rate 35.4%
Eff/ Tax Rate - 3 Yr. Avg. 36%
Payout Ratio 41.7%

NSC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NSC stock intrinsic value calculation we used $9888 million for the last fiscal year's total revenue generated by Norfolk Southern. The default revenue input number comes from 2016 income statement of Norfolk Southern. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our NSC stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 6.5%, whose default value for NSC is calculated based on our internal credit rating of Norfolk Southern, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Norfolk Southern.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of NSC stock the variable cost ratio is equal to 72.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for NSC stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Norfolk Southern.

Corporate tax rate of 27% is the nominal tax rate for Norfolk Southern. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the NSC stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for NSC are equal to 297%.

Life of production assets of 28.5 years is the average useful life of capital assets used in Norfolk Southern operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for NSC is equal to -3.6%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $12409 million for Norfolk Southern - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 304.546 million for Norfolk Southern is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Norfolk Southern at the current share price and the inputted number of shares is $35.8 billion.


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COMPANY NEWS

▶ Did Norfolk Southerns Coal Carloads Push Volumes in Week 16?   [Apr-28-17 05:06PM  Market Realist]
▶ Union Pacific profit lifted by rising coal volumes   [Apr-27-17 09:50AM  Reuters]
▶ Norfolk Southern tops Street 1Q forecasts   [08:04AM  Associated Press]
▶ [$$] Traffic Jam at the Nations Crossroads   [12:28AM  The Wall Street Journal]
▶ Story Stocks from Briefing.com   [Apr-25-17 01:24PM  Briefing.com]
▶ $26.5M in state funding awarded to support railroad projects   [01:00PM  American City Business Journals]
▶ Norfolk Southern: Trailers Rise by Double Digits in Week 15   [Apr-21-17 02:35PM  Market Realist]
▶ Intermodal Traffic for Norfolk Southern in Week 14 of 2017   [Apr-18-17 05:35PM  Market Realist]
▶ CSXs Freight Volumes: How It Stacked Up against Its Peers   [Apr-11-17 09:07AM  Market Realist]
▶ Solid Growth in Volumes without Coal Raises CNIs Carloads   [Apr-04-17 09:06AM  Market Realist]
▶ Unloading Norfolk Southerns Carloads in Week 12   [Mar-31-17 05:35PM  Market Realist]
▶ What Infrastructure Spending Cuts Mean for Freight Companies   [Mar-30-17 05:08PM  Market Realist]
▶ An Ideal Investment for Long-Term Investors   [Mar-13-17 06:00AM  at Morningstar]
▶ [$$] Miss the CSX Rally? Try Norfolk Southern   [Mar-07-17 11:02AM  at Barrons.com]
Stock chart of NSC Financial statements of NSC
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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