Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
NEW YORK (
) has been reiterated by TheStreet Ratings as a buy with a ratings score of A+ . The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels, growth in earnings per share, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
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Highlights from the ratings report include:
- Despite its growing revenue, the company underperformed as compared with the industry average of 8.9%. Since the same quarter one year prior, revenues slightly increased by 0.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- NORFOLK SOUTHERN CORP's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, NORFOLK SOUTHERN CORP increased its bottom line by earning $5.47 versus $4.00 in the prior year. This year, the market expects an improvement in earnings ($5.56 versus $5.47).
- 40.50% is the gross profit margin for NORFOLK SOUTHERN CORP which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 18.20% trails the industry average.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Road & Rail industry and the overall market on the basis of return on equity, NORFOLK SOUTHERN CORP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
Norfolk Southern Corporation, through its subsidiaries, engages in the rail transportation of raw materials, intermediate products, and finished goods primarily in the United States. The company has a P/E ratio of 11.2, equal to the average transportation industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Norfolk Southern has a market cap of $20.77 billion and is part of the
industry. Shares are down 9% year to date as of the close of trading on Monday.
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--Written by a member of TheStreet Ratings Staff.
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