Asset Structure Analysis
Norfolk Southern Corporation’s total assets were $41.7 billion and $38.9 billion at December 31, 2023 and December 31, 2022, respectively.
Property, net was $33.3 billion at December 31, 2023, accounting for 80% of total assets.
Investments were $3.8 billion at December 31, 2023, consisting of 9.1% of total assets.
Total current assets were $3.27 billion at December 31, 2023, making up 7.8% of total assets.
Among total current assets, cash and cash equivalents were $1.57 billion, and accounts receivable, net were $1.15 billion.
Liquidity and Solvency
Total current liabilities were $2.63 billion at December 31, 2023.
The current ratio was 1.24 for 2023.
Total liabilities were $28.9 billion at December 31, 2023.
The debt ratio was 86.8%.
The amount of deferred income taxes was $7.2 billion at December 31, 2023.
Deducting the amount of deferred income taxes from total liabilities, the debt ratio would be 65%.
Norfolk Southern Corporation’s liquidity is sufficient, we think.
Net cash provided by operating activities were $3.2 billion, $4.2 billion and $4.3 billion in 2023, 2022 and 2021, respectively.
We think the company could maintain its liabilities , but the company’s liabilities hit the peek.
Profitability Analysis
Norfolk Southern Corporation’s railway operating revenues
were $12.16 billion, $12.75 billion and $11.14 billion in 2023,
2022 and 2021, respectively.
The railway operating revenues were down 4.6% year-on-year.
The railway operating revenues were up 12.6% year-on year.
Net income was $1.83 billion, $3.3 billion and $3 billion in 2023, 2022 and 2021, respectively.
The profit margin was 15%, 25.9% and 26.9% in 2023, 2022 and 2021, respectively.
Cash Flow Analysis
Net cash provided by operating activities were $3.2 billion, $4.2 billion and $4.3 billion in 2023, 2022 and 2021, respectively.
Property additions were $2.35 billion, $1.95 billion and $1.47 billion in 2023, 2022 and 2021, respectively.
As you can see, property additions consumed a lot of net operating cash, which is not a good thing for shareholders.
Norfolk Southern Corporation’s free cash flow was $850 million, $2.25 billion and $2.83 billion in 2023, 2022 and 2021, respectively.
Dividends was $1.23 billion, $1.17 billion and $1.03 billion in 2023, 2022 and 2021, respectively.
Purchase of retirement of common stock was $622 million $3.1 billion and $3.4 billion in 2023, 2022 and 2021, respectively.
In long-term, the free cash flow should be more than the amount of dividends and purchase of retirement of common stock.
It is not continuous to repurchase common stock by adding debt.
Norfolk Southern Corporation’s operating performance for Q1 2024
Norfolk Southern Corporation’s railway operating revenues were $3 billion and $3.13 billion in Q1 2024 and Q1 2023, respectively.
Net income was $53 million and $466 million in Q1 2024 and Q1 2023, respectively.
Conclusion
We reckon that Norfolk Southern Corporation’s reasonable valuation is $20 billion to $30 billion, while the company’s market capitalization is $50.7 billion.
Disclaimer: The content is for reference only and does not constitute investment advice.
Introduction
Norfolk Southern Corporation (Norfolk Southern) is an Atlanta, Georgia-based company that owns a major freight railroad, Norfolk Southern Railway Company (NSR).
