Intrinsic value of Norfolk Southern - NSC

Previous Close

$147.58

  Intrinsic Value

$96.40

stock screener

  Rating & Target

sell

-35%

Previous close

$147.58

 
Intrinsic value

$96.40

 
Up/down potential

-35%

 
Rating

sell

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 0001), $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 41.3

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  9.90
  9.41
  8.97
  8.57
  8.21
  7.89
  7.60
  7.34
  7.11
  6.90
  6.71
  6.54
  6.38
  6.25
  6.12
  6.01
  5.91
  5.82
  5.74
  5.66
  5.60
  5.54
  5.48
  5.43
  5.39
  5.35
  5.32
  5.28
  5.26
  5.23
Revenue, $m
  11,596
  12,687
  13,825
  15,010
  16,243
  17,525
  18,857
  20,242
  21,681
  23,177
  24,732
  26,349
  28,031
  29,781
  31,604
  33,503
  35,483
  37,547
  39,700
  41,948
  44,295
  46,748
  49,310
  51,990
  54,793
  57,725
  60,794
  64,007
  67,372
  70,896
Variable operating expenses, $m
  2,644
  2,893
  3,152
  3,422
  3,703
  3,996
  4,299
  4,615
  4,943
  5,284
  5,639
  6,007
  6,391
  6,790
  7,206
  7,639
  8,090
  8,561
  9,052
  9,564
  10,099
  10,658
  11,243
  11,854
  12,493
  13,161
  13,861
  14,594
  15,361
  16,164
Fixed operating expenses, $m
  4,765
  4,869
  4,977
  5,086
  5,198
  5,312
  5,429
  5,549
  5,671
  5,795
  5,923
  6,053
  6,186
  6,322
  6,462
  6,604
  6,749
  6,897
  7,049
  7,204
  7,363
  7,525
  7,690
  7,859
  8,032
  8,209
  8,390
  8,574
  8,763
  8,956
Total operating expenses, $m
  7,409
  7,762
  8,129
  8,508
  8,901
  9,308
  9,728
  10,164
  10,614
  11,079
  11,562
  12,060
  12,577
  13,112
  13,668
  14,243
  14,839
  15,458
  16,101
  16,768
  17,462
  18,183
  18,933
  19,713
  20,525
  21,370
  22,251
  23,168
  24,124
  25,120
Operating income, $m
  4,187
  4,925
  5,696
  6,501
  7,341
  8,217
  9,129
  10,078
  11,067
  12,097
  13,170
  14,288
  15,453
  16,669
  17,937
  19,261
  20,644
  22,089
  23,599
  25,180
  26,833
  28,564
  30,377
  32,277
  34,268
  36,355
  38,543
  40,839
  43,248
  45,776
EBITDA, $m
  5,350
  6,197
  7,082
  8,006
  8,970
  9,974
  11,019
  12,108
  13,241
  14,421
  15,649
  16,929
  18,263
  19,654
  21,105
  22,619
  24,201
  25,853
  27,579
  29,385
  31,274
  33,251
  35,321
  37,489
  39,760
  42,142
  44,638
  47,256
  50,002
  52,883
Interest expense (income), $m
  0
  541
  648
  759
  874
  993
  1,118
  1,248
  1,382
  1,522
  1,668
  1,819
  1,976
  2,139
  2,309
  2,486
  2,670
  2,862
  3,062
  3,271
  3,488
  3,715
  3,953
  4,200
  4,459
  4,730
  5,013
  5,310
  5,620
  5,945
  6,285
Earnings before tax, $m
  3,646
  4,276
  4,937
  5,628
  6,348
  7,099
  7,881
  8,696
  9,545
  10,430
  11,351
  12,312
  13,314
  14,360
  15,451
  16,591
  17,781
  19,026
  20,329
  21,691
  23,118
  24,612
  26,177
  27,817
  29,537
  31,341
  33,234
  35,219
  37,303
  39,491
Tax expense, $m
  984
  1,155
  1,333
  1,520
  1,714
  1,917
  2,128
  2,348
  2,577
  2,816
  3,065
  3,324
  3,595
  3,877
  4,172
  4,479
  4,801
  5,137
  5,489
  5,857
  6,242
  6,645
  7,068
  7,511
  7,975
  8,462
  8,973
  9,509
  10,072
  10,663
Net income, $m
  2,662
  3,122
  3,604
  4,108
  4,634
  5,182
  5,753
  6,348
  6,968
  7,614
  8,286
  8,988
  9,719
  10,482
  11,279
  12,111
  12,980
  13,889
  14,840
  15,835
  16,876
  17,966
  19,109
  20,307
  21,562
  22,879
  24,261
  25,710
  27,232
  28,829

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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 assets, $m
  39,307
  43,006
  46,863
  50,880
  55,060
  59,406
  63,923
  68,617
  73,496
  78,566
  83,836
  89,317
  95,019
  100,954
  107,133
  113,570
  120,280
  127,277
  134,577
  142,196
  150,153
  158,466
  167,154
  176,238
  185,738
  195,679
  206,082
  216,974
  228,379
  240,325
Adjusted assets (=assets-cash), $m
  39,307
  43,006
  46,863
  50,880
  55,060
  59,406
  63,923
  68,617
  73,496
  78,566
  83,836
  89,317
  95,019
  100,954
  107,133
  113,570
  120,280
  127,277
  134,577
  142,196
  150,153
  158,466
  167,154
  176,238
  185,738
  195,679
  206,082
  216,974
  228,379
  240,325
Revenue / Adjusted assets
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
  0.295
Average production assets, $m
  33,013
  36,119
  39,359
  42,732
  46,243
  49,893
  53,687
  57,629
  61,726
  65,985
  70,411
  75,014
  79,803
  84,787
  89,977
  95,384
  101,019
  106,895
  113,026
  119,426
  126,109
  133,090
  140,387
  148,016
  155,995
  164,344
  173,081
  182,228
  191,807
  201,840
Working capital, $m
  -429
  -469
  -512
  -555
  -601
  -648
  -698
  -749
  -802
  -858
  -915
  -975
  -1,037
  -1,102
  -1,169
  -1,240
  -1,313
  -1,389
  -1,469
  -1,552
  -1,639
  -1,730
  -1,824
  -1,924
  -2,027
  -2,136
  -2,249
  -2,368
  -2,493
  -2,623
Total debt, $m
  11,788
  13,793
  15,884
  18,061
  20,326
  22,682
  25,130
  27,675
  30,319
  33,067
  35,923
  38,894
  41,984
  45,201
  48,550
  52,039
  55,676
  59,468
  63,425
  67,555
  71,867
  76,373
  81,082
  86,005
  91,154
  96,542
  102,181
  108,084
  114,265
  120,740
Total liabilities, $m
  21,304
  23,309
  25,400
  27,577
  29,842
  32,198
  34,646
  37,191
  39,835
  42,583
  45,439
  48,410
  51,500
  54,717
  58,066
  61,555
  65,192
  68,984
  72,941
  77,071
  81,383
  85,889
  90,598
  95,521
  100,670
  106,058
  111,697
  117,600
  123,781
  130,256
Total equity, $m
  18,003
  19,697
  21,463
  23,303
  25,217
  27,208
  29,277
  31,427
  33,661
  35,983
  38,397
  40,907
  43,519
  46,237
  49,067
  52,015
  55,088
  58,293
  61,636
  65,126
  68,770
  72,577
  76,557
  80,717
  85,068
  89,621
  94,386
  99,374
  104,597
  110,069
Total liabilities and equity, $m
  39,307
  43,006
  46,863
  50,880
  55,059
  59,406
  63,923
  68,618
  73,496
  78,566
  83,836
  89,317
  95,019
  100,954
  107,133
  113,570
  120,280
  127,277
  134,577
  142,197
  150,153
  158,466
  167,155
  176,238
  185,738
  195,679
  206,083
  216,974
  228,378
  240,325
Debt-to-equity ratio
  0.650
  0.700
  0.740
  0.780
  0.810
  0.830
  0.860
  0.880
  0.900
  0.920
  0.940
  0.950
  0.960
  0.980
  0.990
  1.000
  1.010
  1.020
  1.030
  1.040
  1.050
  1.050
  1.060
  1.070
  1.070
  1.080
  1.080
  1.090
  1.090
  1.100
Adjusted equity ratio
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  2,662
  3,122
  3,604
  4,108
  4,634
  5,182
  5,753
  6,348
  6,968
  7,614
  8,286
  8,988
  9,719
  10,482
  11,279
  12,111
  12,980
  13,889
  14,840
  15,835
  16,876
  17,966
  19,109
  20,307
  21,562
  22,879
  24,261
  25,710
  27,232
  28,829
Depreciation, amort., depletion, $m
  1,162
  1,272
  1,386
  1,505
  1,628
  1,757
  1,890
  2,029
  2,173
  2,323
  2,479
  2,641
  2,810
  2,985
  3,168
  3,359
  3,557
  3,764
  3,980
  4,205
  4,440
  4,686
  4,943
  5,212
  5,493
  5,787
  6,094
  6,416
  6,754
  7,107
Funds from operations, $m
  3,824
  4,394
  4,990
  5,613
  6,262
  6,939
  7,644
  8,377
  9,141
  9,937
  10,766
  11,629
  12,529
  13,468
  14,447
  15,470
  16,537
  17,653
  18,820
  20,040
  21,316
  22,653
  24,052
  25,519
  27,055
  28,666
  30,355
  32,127
  33,985
  35,936
Change in working capital, $m
  -39
  -40
  -42
  -44
  -46
  -47
  -49
  -51
  -53
  -55
  -58
  -60
  -62
  -65
  -67
  -70
  -73
  -76
  -80
  -83
  -87
  -91
  -95
  -99
  -104
  -108
  -114
  -119
  -124
  -130
Cash from operations, $m
  3,863
  4,434
  5,032
  5,657
  6,308
  6,986
  7,693
  8,429
  9,195
  9,992
  10,823
  11,689
  12,592
  13,533
  14,515
  15,540
  16,611
  17,730
  18,899
  20,123
  21,403
  22,744
  24,147
  25,618
  27,159
  28,774
  30,469
  32,245
  34,110
  36,066
Maintenance CAPEX, $m
  -1,058
  -1,162
  -1,272
  -1,386
  -1,505
  -1,628
  -1,757
  -1,890
  -2,029
  -2,173
  -2,323
  -2,479
  -2,641
  -2,810
  -2,985
  -3,168
  -3,359
  -3,557
  -3,764
  -3,980
  -4,205
  -4,440
  -4,686
  -4,943
  -5,212
  -5,493
  -5,787
  -6,094
  -6,416
  -6,754
New CAPEX, $m
  -2,972
  -3,106
  -3,240
  -3,374
  -3,510
  -3,650
  -3,794
  -3,943
  -4,097
  -4,258
  -4,427
  -4,603
  -4,789
  -4,984
  -5,190
  -5,407
  -5,635
  -5,876
  -6,131
  -6,399
  -6,683
  -6,982
  -7,297
  -7,629
  -7,979
  -8,349
  -8,737
  -9,147
  -9,579
  -10,033
Cash from investing activities, $m
  -4,030
  -4,268
  -4,512
  -4,760
  -5,015
  -5,278
  -5,551
  -5,833
  -6,126
  -6,431
  -6,750
  -7,082
  -7,430
  -7,794
  -8,175
  -8,575
  -8,994
  -9,433
  -9,895
  -10,379
  -10,888
  -11,422
  -11,983
  -12,572
  -13,191
  -13,842
  -14,524
  -15,241
  -15,995
  -16,787
Free cash flow, $m
  -167
  165
  521
  897
  1,293
  1,708
  2,142
  2,596
  3,068
  3,561
  4,073
  4,607
  5,161
  5,739
  6,340
  6,965
  7,617
  8,296
  9,004
  9,744
  10,515
  11,321
  12,164
  13,045
  13,968
  14,933
  15,944
  17,004
  18,115
  19,279
Issuance/(repayment) of debt, $m
  1,952
  2,005
  2,091
  2,177
  2,265
  2,356
  2,448
  2,544
  2,644
  2,748
  2,857
  2,971
  3,090
  3,216
  3,349
  3,489
  3,637
  3,792
  3,957
  4,130
  4,313
  4,505
  4,709
  4,923
  5,149
  5,388
  5,639
  5,903
  6,182
  6,475
Issuance/(repurchase) of shares, $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 from financing (excl. dividends), $m  
  1,952
  2,005
  2,091
  2,177
  2,265
  2,356
  2,448
  2,544
  2,644
  2,748
  2,857
  2,971
  3,090
  3,216
  3,349
  3,489
  3,637
  3,792
  3,957
  4,130
  4,313
  4,505
  4,709
  4,923
  5,149
  5,388
  5,639
  5,903
  6,182
  6,475
Total cash flow (excl. dividends), $m
  1,785
  2,170
  2,612
  3,074
  3,558
  4,064
  4,591
  5,140
  5,712
  6,309
  6,930
  7,577
  8,252
  8,955
  9,689
  10,454
  11,254
  12,088
  12,961
  13,873
  14,828
  15,827
  16,873
  17,969
  19,117
  20,321
  21,583
  22,907
  24,296
  25,754
Retained Cash Flow (-), $m
  -1,644
  -1,694
  -1,767
  -1,840
  -1,914
  -1,991
  -2,069
  -2,150
  -2,234
  -2,322
  -2,414
  -2,510
  -2,611
  -2,718
  -2,830
  -2,948
  -3,073
  -3,205
  -3,343
  -3,490
  -3,644
  -3,807
  -3,979
  -4,160
  -4,351
  -4,553
  -4,765
  -4,988
  -5,224
  -5,471
Prev. year cash balance distribution, $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 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
  142
  476
  845
  1,235
  1,644
  2,073
  2,522
  2,990
  3,478
  3,987
  4,516
  5,067
  5,640
  6,237
  6,859
  7,506
  8,180
  8,884
  9,618
  10,384
  11,184
  12,020
  12,894
  13,808
  14,766
  15,768
  16,818
  17,919
  19,073
  20,283
Discount rate, %
  5.60
  5.88
  6.17
  6.48
  6.81
  7.15
  7.50
  7.88
  8.27
  8.69
  9.12
  9.58
  10.06
  10.56
  11.09
  11.64
  12.22
  12.84
  13.48
  14.15
  14.86
  15.60
  16.38
  17.20
  18.06
  18.96
  19.91
  20.91
  21.95
  23.05
PV of cash for distribution, $m
  134
  424
  706
  960
  1,183
  1,370
  1,520
  1,630
  1,701
  1,733
  1,729
  1,691
  1,623
  1,530
  1,417
  1,289
  1,152
  1,011
  871
  736
  610
  495
  394
  306
  233
  173
  125
  88
  60
  40
Current shareholders' claim on cash, %
  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 is a holding company engaged in the rail transportation business. As of December 31, 2016, the Company operated approximately 19,500 miles of road primarily in the East and Midwest. The Company is engaged in the rail transportation of raw materials, intermediate products and finished goods primarily in the Southeast, East and Midwest. The Company, through interchange with rail carriers, to and from the rest of the United States. The Company also transports overseas freight through various Atlantic and Gulf Coast ports. It provides logistics services and offers the intermodal network in the eastern half of the United States. The Company's system reaches various manufacturing plants, electric generating facilities, mines, distribution centers and other businesses located in its service area. The Company's intermodal market group consists of shipments moving in trailers, domestic and international containers, and RoadRailer equipment.

FINANCIAL RATIOS  of  Norfolk Southern (NSC)

Valuation Ratios
P/E Ratio 25.7
Price to Sales 4.3
Price to Book 3.5
Price to Tangible Book
Price to Cash Flow 14.1
Price to Free Cash Flow 37.4
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 $10551 million for the last fiscal year's total revenue generated by Norfolk Southern. The default revenue input number comes from 0001 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 9.9% 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 5.6%, 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 22.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $4662 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 5.5% 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 284.7%.

Life of production assets of 28.4 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 -3.7%. 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 - $16359 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 280.03 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 $41.3 billion.

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COMPANY NEWS

▶ Norfolk Southern completes long ride to Atlanta HQ   [Dec-14-18 07:21AM  American City Business Journals]
▶ Governor: Norfolk Southern moving headquarters to Atlanta   [Dec-12-18 05:53PM  Associated Press]
▶ Norfolk Southern officially announces new Atlanta headquarters   [02:00PM  American City Business Journals]
▶ First Look: Norfolk Southern to create stunning Midtown campus   [07:14AM  American City Business Journals]
▶ Plans for Norfolk Southerns Atlanta HQ to be unveiled   [Dec-11-18 02:57PM  American City Business Journals]
▶ Hedge Funds Are Betting On Norfolk Southern Corp. (NSC)   [Dec-08-18 10:59AM  Insider Monkey]
▶ Collect Premium While NSC Recovers   [Dec-06-18 09:15AM  InvestorPlace]
▶ In bid to lure Norfolk Southern HQ, Atlanta greenlights $24M property tax break   [Dec-04-18 03:05PM  American City Business Journals]
▶ Cousins Properties buys land to develop Norfolk Southern Midtown headquarters   [Nov-20-18 07:24AM  American City Business Journals]
▶ Real Estate Notebook: Georgia's pitch for Amazon; Norfolk Southern HQ   [Nov-16-18 06:30AM  American City Business Journals]
▶ The 5 Non-Oil Stocks Most Exposed to Oils Crash   [Nov-14-18 03:20PM  Barrons.com]
▶ Norfolk Southern could occupy new Midtown HQ by 2021   [Nov-13-18 11:32PM  American City Business Journals]
▶ Historic Gulch deal lays tracks for $575 million Norfolk Southern HQ   [Nov-09-18 04:30AM  American City Business Journals]
▶ Why Atlanta apparently won't be winning HQ2   [04:00AM  American City Business Journals]
▶ Invest Atlanta delays action on Norfolk Southern HQ relocation   [Nov-08-18 12:44PM  American City Business Journals]
▶ NSC Stock is Not Out of the Woods Yet   [09:45AM  InvestorPlace]
▶ Downtown's historic Gulch deal gets greenlight   [07:32AM  American City Business Journals]
▶ Gov. Deal: Were not going to have our hearts broken if state doesnt land Amazon HQ2   [Nov-05-18 12:33PM  American City Business Journals]
▶ Mayor Bottoms: Would be 'travesty' to lose Norfolk Southern deal   [Nov-02-18 11:48AM  American City Business Journals]
▶ Norfolk Southern CEO talks about possible HQ move to Atlanta   [Oct-24-18 08:03PM  American City Business Journals]
▶ Norfolk Southern: 3Q Earnings Snapshot   [08:47AM  Associated Press]
▶ [$$] Rising demand drives record quarter for Norfolk Southern   [Oct-23-18 09:00PM  Financial Times]
▶ Mayor Bottoms to present new Gulch proposal to Atlanta City Council   [07:17AM  American City Business Journals]
▶ Gov. Deal cements strong economic development legacy (Slideshow)   [Oct-12-18 04:00AM  American City Business Journals]
▶ For MARTA transit expansion, now comes the hard part   [Oct-08-18 02:02AM  American City Business Journals]
▶ Market Sell-Off Can't Derail These 4 Hot Dow Jones Transport Stocks   [Oct-07-18 06:39PM  Investor's Business Daily]
▶ Impala Asset Managements Performance, AUM, and Holdings   [Sep-25-18 08:20PM  Insider Monkey]
▶ 'Black Panther' actor: Atlanta rife with 'actorpreneur' opportunities   [Sep-19-18 01:29PM  American City Business Journals]
▶ Nasdaq Snaps Back Despite Tariff News; Netflix Jumps On Emmy Results   [Sep-18-18 01:39PM  Investor's Business Daily]
▶ Something unusual on the railroad   [01:14PM  CNBC Videos]
▶ [$$] Coal Prices Rise as Hurricane Florence Disrupts Exports   [Sep-13-18 08:07PM  The Wall Street Journal]

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