NEW YORK ( TheStreet) -- Before analyzing a company for investment, it's important to have a perspective on how well the business has performed. At at the end of the day, if you are an investor, you are buying the business.The FAST Graphs presented with this article will focus first on the business behind the stock. The orange line on the graph plots earnings per share since 2001. A quick glance vividly reveals the historical operating record of the company.
Simply put, the reader should ask whether this example is worthy of a greater investment of their time and effort based on the data as presented and organized. The FAST Graphs' unique advantage is the graphical articulation of the price value proposition. Earnings determine market price: The following earnings and price correlated FAST Graphs clearly illustrates the importance of earnings. The Earnings Growth Rate Line or True Worth Line (orange line with white triangles) is correlated with the historical stock price line. On graph after graph the lines will move in tandem. If the stock price strays away from the earnings line (over or under), inevitably it will come back to earnings. Earnings and Price Correlated Fundamentals at a Glance A quick glance at the historical earnings and price correlated FAST Graphs on Norfolk Southern shows a picture of undervaluation based upon the historical earnings growth rate of 19.7% and a current P/E of 13.7. Analysts are forecasting the earnings growth to continue at about 11%, and when you look at the forecasting graph below, the stock appears overvalued (it's inside of the value corridor of the five orange lines, based on future growth).