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Why Norfolk Southern Corporation (NYSE:NSC) Could Be Worth Watching

Today we're going to take a look at the well-established Norfolk Southern Corporation (NYSE:NSC). The company's stock received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$255 at one point, and dropping to the lows of US$199. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Norfolk Southern's current trading price of US$212 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Norfolk Southern’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Norfolk Southern

What's The Opportunity In Norfolk Southern?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 13.03% above my intrinsic value, which means if you buy Norfolk Southern today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth $187.47, there’s only an insignificant downside when the price falls to its real value. So, is there another chance to buy low in the future? Given that Norfolk Southern’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

What kind of growth will Norfolk Southern generate?

earnings-and-revenue-growth
earnings-and-revenue-growth

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to grow by a double-digit 15% over the next couple of years, the outlook is positive for Norfolk Southern. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? NSC’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

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Are you a potential investor? If you’ve been keeping tabs on NSC, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

If you want to dive deeper into Norfolk Southern, you'd also look into what risks it is currently facing. At Simply Wall St, we found 1 warning sign for Norfolk Southern and we think they deserve your attention.

If you are no longer interested in Norfolk Southern, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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