Is It Too Late To Consider Buying Norfolk Southern Corporation (NYSE:NSC)?
Today we're going to take a look at the well-established Norfolk Southern Corporation (NYSE:NSC). The company's stock saw significant share price movement during recent months on the NYSE, rising to highs of US$289 and falling to the lows of US$221. 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$230 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.
View our latest analysis for Norfolk Southern
What is Norfolk Southern worth?
According to my valuation model, Norfolk Southern seems to be fairly priced at around 13% below my intrinsic value, which means if you buy Norfolk Southern today, you’d be paying a fair price for it. And if you believe that the stock is really worth $266.09, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because Norfolk Southern’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What kind of growth will Norfolk Southern generate?
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. Norfolk Southern's earnings over the next few years are expected to increase by 24%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? It seems like the market has already priced in NSC’s positive outlook, 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 conviction to buy should the price fluctuates below the true value?
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 further examining 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. In terms of investment risks, we've identified 2 warning signs with Norfolk Southern, and understanding them should be part of your investment process.
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.
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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.
