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. Norfolk Southern ( NSC) is one of the nation's premier transportation companies. This article will reveal the business prospects of Norfolk Southern through the lens of FAST Graphs' fundamentals analyzer software tool. Therefore, it is offered as the first step before a more comprehensive research effort. Our objective is to provide companies that have excellent historical records and appear reasonably priced based on past, present and future data and expectations. A quick glance at the graph itself and the orange earnings justified valuation line will tell the readers volumes about how well the company has historically been managed and performed as an operating business.
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).
When presented separately like this, the additional rate of return a dividend paying stock produces for shareholders becomes undeniably evident. In addition to the 15.1% annualized ROR (w/o dividend) (green circle), long-term shareholders of Norfolk Southern, assuming an initial investment of $10,000, would have received an additional $8,533.26 in total dividends paid (blue highlighting) that increased their annualized ROR (w/o dividend) from 15.1% to a total annualized ROR plus dividends paid of 16.4% compared with 2.6% in the S&P 500.