In December 2018, Norfolk Southern Corporation (NYSE:NSC) announced its earnings update. Overall, analysts seem cautiously bearish, as a 6.0% rise in profits is expected in the upcoming year, against the higher past 5-year average growth rate of 24%. With trailing-twelve-month net income at current levels of US$2.7b, we should see this rise to US$2.8b in 2020. Below is a brief commentary around Norfolk Southern's earnings outlook going forward, which may give you a sense of market sentiment for the company. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
How will Norfolk Southern perform in the near future?
The 21 analysts covering NSC view its longer term outlook with a positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To get an idea of the overall earnings growth trend for NSC, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
This results in an annual growth rate of 8.3% based on the most recent earnings level of US$2.7b to the final forecast of US$3.4b by 2022. This leads to an EPS of $13.76 in the final year of projections relative to the current EPS of $9.58. With a current profit margin of 23%, this movement will result in a margin of 27% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Norfolk Southern, I've compiled three essential aspects you should further examine:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Norfolk Southern worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Norfolk Southern is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Norfolk Southern? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.