Key Stats for Norfolk Southern Stock
- Past week’s performance: +2%
- 52-week range: $201.63 to $309.21
- Valuation model target price: $376.61
- Implied upside: 22.9% over 2.9 years
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What Happened?
Shares of rail transportation company Norfolk Southern (NSC) rose about 2% this week. And the stock reached a 52-week high near $309.
The gains extend momentum from strong fourth-quarter 2025 results reported on January 29. NSC beat EPS estimates with $3.22 versus $2.77 expected. Revenue came in at $3.0 billion. And the company exceeded its full-year productivity target with over $215 million in savings.
Management emphasized safety and service improvements. So, investors rewarded operational progress. Volume trends stayed mixed. But intermodal and merchandise shipments provided support. And coal volumes held steady.
The company announced a $1.35 quarterly dividend payable on February 20. This added to positive sentiment. Broader rail sector strength helped. And industrial development projects fueled over $7.7 billion in activity last year.
There were no major negative events this week. So, the stock reflected confidence in steady execution.
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Is Norfolk Southern Stock Undervalued?
Under the valuation model assumptions realized through 2028, the stock is modeled using:
- Revenue growth (CAGR): 4.0%
- Operating margins: 35.7%
- Exit P/E multiple: 23.0x
Based on these inputs, the model estimates a target price of $376.61. This implies 22.9% total return from the current share price. And it suggests a 7.4% annualized return over the next 2.9 years.
The growth assumption looks modest. Because volume recovery continues across segments. Intermodal leads the way. And merchandise benefits from manufacturing.
Productivity savings support margins. Cost discipline remains key. Operating leverage helps as volumes grow. Rail networks provide essential service. Contracts offer pricing power. So, cash flows stay predictable.
Diversification across commodities reduces risks. Coal declines offset by other areas. But efficiency drives profitability. The dividend provides income. And share repurchases add shareholder value.
If volume growth meets or exceeds plans, returns could improve. But base assumptions reflect a balanced view. Infrastructure demands support for long-term stability.
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