Norfolk Southern Corp Valuation – February 2019 $NSC

Company Profile (excerpt from Reuters): Norfolk Southern Corporation, incorporated on August 24, 2009, is a holding company engaged principally in the rail transportation business. As of December 31, 2016, the Company operated approximately 19,500 miles of road primarily in the East and Midwest. The Company is engaged in the rail transportation of raw materials, intermediate products and finished goods primarily in the Southeast, East and Midwest, and through interchange with rail carriers, to and from the rest of the United States. It also transports overseas freight through several Atlantic and Gulf Coast ports. It offers an intermodal network in the eastern half of the United States. The Company’s system reaches various manufacturing plants, electric generating facilities, mines, distribution centers and other businesses located in its service area.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of NSC – February 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $49,083,342,742 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.72 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 157.89% Pass
6. Moderate PEmg Ratio PEmg < 20 17.13 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.26 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.72 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -14.49 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $10.71
MG Growth Estimate 13.24%
MG Value $374.73
Opinion Undervalued
MG Grade C-
MG Value based on 3% Growth $155.35
MG Value based on 0% Growth $91.07
Market Implied Growth Rate 4.31%
Current Price $183.52
% of Intrinsic Value 48.97%

Norfolk Southern Corp. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high PB ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $5.69 in 2015 to an estimated $10.71 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 4.31% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Norfolk Southern Corp. revealed the company was trading above its Graham Number of $114.11. The company pays a dividend of $3.04 per share, for a yield of 1.7% Its PEmg (price over earnings per share – ModernGraham) was 17.13, which was below the industry average of 19.16, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-69.65.

Norfolk Southern Corp. receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$69.65
Graham Number $114.11
PEmg 17.13
Current Ratio 0.72
PB Ratio 3.26
Current Dividend $3.04
Dividend Yield 1.66%
Number of Consecutive Years of Dividend Growth 2

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $1,862,000,000
Total Current Liabilities $2,591,000,000
Long-Term Debt $10,560,000,000
Total Assets $36,239,000,000
Intangible Assets $0
Total Liabilities $20,877,000,000
Shares Outstanding (Diluted Average) 273,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $10.10
Dec2018 $9.51
Dec2017 $18.61
Dec2016 $5.62
Dec2015 $5.10
Dec2014 $6.39
Dec2013 $6.04
Dec2012 $5.37
Dec2011 $5.45
Dec2010 $4.00
Dec2009 $2.76
Dec2008 $4.52
Dec2007 $3.68
Dec2006 $3.57
Dec2005 $3.11
Dec2004 $2.31
Dec2003 $1.37
Dec2002 $1.18
Dec2001 $0.97
Dec2000 $0.45
Dec1999 $0.63

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $10.71
Dec2018 $10.36
Dec2017 $9.98
Dec2016 $5.67
Dec2015 $5.69
Dec2014 $5.81
Dec2013 $5.25
Dec2012 $4.71
Dec2011 $4.28
Dec2010 $3.70
Dec2009 $3.54
Dec2008 $3.77
Dec2007 $3.20
Dec2006 $2.74
Dec2005 $2.15
Dec2004 $1.53
Dec2003 $1.07

Recommended Reading:

Other ModernGraham posts about the company

Norfolk Southern Corp Valuation – April 2018-corrected
Norfolk Southern Corp Valuation – April 2018 $NSC
Norfolk Southern Corp Valuation – December 2016 $NSC
Norfolk Southern Corp Valuation – August 2016 $NSC
26 Best Stocks For Value Investors This Week – 2/6/16

Other ModernGraham posts about related companies

CSX Corp Valuation – February 2019 $CSX
Union Pacific Corp Valuation – February 2019 $UNP
Canadian Pacific Railway Ltd Valuation – August 2018 $TSE-CP
Canadian National Railway Co Valuation – August 2018 $TSE:CNR
Kansas City Southern Valuation – May 2018 $KSU
Norfolk Southern Corp Valuation – April 2018-corrected
Norfolk Southern Corp Valuation – April 2018 $NSC
CSX Corporation Valuation – April 2018 $CSX
Union Pacific Corp Valuation – April 2018 $UNP
Canadian Pacific Railway Ltd Valuation – Initial Coverage $TSE:CP

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Ensco PLC Valuation – July 2018 $ESV

Company Profile (excerpt from Reuters): Ensco plc, incorporated on September 18, 2009, is an offshore contract drilling company. The Company provides offshore contract drilling services to the international oil and gas industry. The Company operates through three segments: Floaters, Jackups and Other. Its Floaters segment includes the Company’s drillships and semisubmersible rigs. The Other segment consists of management services on rigs owned by third parties. The Floaters and the Jackups segments provide contract drilling. It owned and operated an offshore drilling rig fleet of 57 rigs, including two rigs under construction, with drilling operations in markets around the world, as of December 31, 2016.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of ESV – July 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $3,102,978,475 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.75 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -94.06% Fail
6. Moderate PEmg Ratio PEmg < 20 -3.38 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.37 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.75 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 4.96 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg -$2.15
MG Growth Estimate 1.10%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth -$31.17
MG Value based on 0% Growth -$18.27
Market Implied Growth Rate -5.94%
Current Price $7.26
% of Intrinsic Value N/A

ENSCO PLC does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability or growth over the last ten years, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the net current assets, and the lack of earnings stability over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $-2.32 in 2014 to an estimated $-2.15 for 2018. This level of negative earnings does not support a positive valuation.As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into ENSCO PLC revealed the company was trading above its Graham Number of $0. The company pays a dividend of $0.04 per share, for a yield of 0.6% Its PEmg (price over earnings per share – ModernGraham) was -3.38, which was below the industry average of 49.12, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-10.06.

ENSCO PLC scores quite poorly in the ModernGraham grading system, with an overall grade of D.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$10.06
Graham Number $0.00
PEmg -3.38
Current Ratio 2.75
PB Ratio 0.37
Current Dividend $0.04
Dividend Yield 0.55%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Total Current Assets $1,578,700,000
Total Current Liabilities $573,300,000
Long-Term Debt $4,987,300,000
Total Assets $14,533,700,000
Intangible Assets $14,200,000
Total Liabilities $5,942,600,000
Shares Outstanding (Diluted Average) 433,600,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate -$1.47
Dec2017 -$0.91
Dec2016 $3.13
Dec2015 -$6.88
Dec2014 -$16.88
Dec2013 $6.07
Dec2012 $5.04
Dec2011 $3.08
Dec2010 $4.06
Dec2009 $5.48
Dec2008 $8.02
Dec2007 $6.73
Dec2006 $5.04
Dec2005 $1.87
Dec2004 $0.62
Dec2003 $0.66
Dec2002 $0.33
Dec2001 $1.50
Dec2000 $0.61
Dec1999 $0.00
Dec1998 $1.81

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$2.15
Dec2017 -$2.69
Dec2016 -$3.02
Dec2015 -$4.70
Dec2014 -$2.32
Dec2013 $4.89
Dec2012 $4.58
Dec2011 $4.72
Dec2010 $5.65
Dec2009 $6.11
Dec2008 $5.77
Dec2007 $4.09
Dec2006 $2.41
Dec2005 $1.06
Dec2004 $0.69
Dec2003 $0.69
Dec2002 $0.75

Recommended Reading:

Other ModernGraham posts about the company

Ensco PLC Valuation – August 2016 $ESV
Ensco plc Analysis – 2015 Update $ESV
19 Companies in the Spotlight This Week – 7/26/14
Ensco plc Annual Valuation – 2014 $ESV
5 Companies to Research with the Lowest PEmg Ratios for Defensive Investors – June 2014

Other ModernGraham posts about related companies

Noble Corp PLC Valuation – June 2018 $NE
Rowan Companies PLC Valuation – June 2018 $RDC
Diamond Offshore Drilling Inc Valuation – June 2018 $DO
Transocean Ltd Valuation – June 2018 $RIG
Nabors Industries Ltd Valuation – June 2018 $NBR
QEP Resources Inc Valuation – June 2018 $QEP
Pioneer Natural Resources Co Valuation – June 2018 $PXD
Schlumberger Ltd Valuation – June 2018 $SLB
Anadarko Petroleum Corp Valuation – June 2018 $APC
Apache Corp Valuation – June 2018 $APA

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Norfolk Southern Corp Valuation – April 2018 $NSC

Company Profile (excerpt from Reuters): Norfolk Southern Corporation, incorporated on August 24, 2009, is a holding company engaged principally in the rail transportation business. As of December 31, 2016, the Company operated approximately 19,500 miles of road primarily in the East and Midwest. The Company is engaged in the rail transportation of raw materials, intermediate products and finished goods primarily in the Southeast, East and Midwest, and through interchange with rail carriers, to and from the rest of the United States. It also transports overseas freight through several Atlantic and Gulf Coast ports. It offers an intermodal network in the eastern half of the United States. The Company’s system reaches various manufacturing plants, electric generating facilities, mines, distribution centers and other businesses located in its service area.

NSC Chart

NSC data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of NSC – April 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $41,438,714,409 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.84 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 362.33% Pass
6. Moderate PEmg Ratio PEmg < 20 8.21 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.40 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.84 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -23.07 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $16.62
MG Growth Estimate 15.00%
MG Value $639.97
Opinion Undervalued
MG Grade B
MG Value based on 3% Growth $241.03
MG Value based on 0% Growth $141.29
Market Implied Growth Rate -0.14%
Current Price $136.48
% of Intrinsic Value 21.33%

Norfolk Southern Corp. qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the low current ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $5.81 in 2014 to an estimated $16.62 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 0.14% annual earnings loss over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Norfolk Southern Corp. revealed the company was trading above its Graham Number of $101.73. The company pays a dividend of $2.44 per share, for a yield of 1.8% Its PEmg (price over earnings per share – ModernGraham) was 8.21, which was below the industry average of 25.23, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-59.82.

Norfolk Southern Corp. performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$59.82
Graham Number $101.73
PEmg 8.21
Current Ratio 0.84
PB Ratio 2.40
Current Dividend $2.44
Dividend Yield 1.79%
Number of Consecutive Years of Dividend Growth 1

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2017
Total Current Assets $2,149,000,000
Total Current Liabilities $2,545,000,000
Long-Term Debt $9,136,000,000
Total Assets $35,711,000,000
Intangible Assets $0
Total Liabilities $19,352,000,000
Shares Outstanding (Diluted Average) 287,600,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $7.99
Dec2017 $37.22
Dec2016 $11.24
Dec2015 $10.20
Dec2014 $6.39
Dec2013 $6.04
Dec2012 $5.37
Dec2011 $5.45
Dec2010 $4.00
Dec2009 $2.76
Dec2008 $4.52
Dec2007 $3.68
Dec2006 $3.57
Dec2005 $3.11
Dec2004 $2.31
Dec2003 $1.37
Dec2002 $1.18
Dec2001 $0.97
Dec2000 $0.45
Dec1999 $0.63
Dec1998 $1.93

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $16.62
Dec2017 $18.70
Dec2016 $8.91
Dec2015 $7.39
Dec2014 $5.81
Dec2013 $5.25
Dec2012 $4.71
Dec2011 $4.28
Dec2010 $3.70
Dec2009 $3.54
Dec2008 $3.77
Dec2007 $3.20
Dec2006 $2.74
Dec2005 $2.15
Dec2004 $1.53
Dec2003 $1.07
Dec2002 $0.95

Recommended Reading:

Other ModernGraham posts about the company

Norfolk Southern Corp Valuation – December 2016 $NSC
Norfolk Southern Corp Valuation – August 2016 $NSC
26 Best Stocks For Value Investors This Week – 2/6/16
Norfolk Southern Corp Valuation – February 2016 Update $NSC
10 Undervalued Companies for the Defensive Dividend Stock Investor – February 2016

Other ModernGraham posts about related companies

CSX Corporation Valuation – April 2018 $CSX
Union Pacific Corp Valuation – April 2018 $UNP
Canadian Pacific Railway Ltd Valuation – Initial Coverage $TSE:CP
Canadian National Railway Co Valuation – Initial Valuation $TSE:CNR
Kansas City Southern Valuation – December 2016 $KSU
Norfolk Southern Corp Valuation – December 2016 $NSC
Norfolk Southern Corp Valuation – August 2016 $NSC
CSX Corporation Valuation – August 2016 $CSX
Union Pacific Corp Valuation – August 2016 $UNP
Norfolk Southern Corp Valuation – February 2016 Update $NSC

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Transcontinental Inc Valuation – Initial Coverage $TSE:TCL.A

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – March 2017.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Transcontinental Inc (TSE:TCL.A) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Transcontinental Inc. is a printing company. The Company has operations in print, flexible packaging, publishing and digital media, both in Canada and the United States. The Company’s segments include the Printing and Packaging Sector, and the Media Sector. The Printing and Packaging Sector includes the manufacturing activities of the Company, and generates revenues from various activities, such as the printing of retail flyers, magazines, newspapers, color books, personalized and mass marketing products, and the production of flexible packaging solutions in Canada and the United States. The Media Sector generates revenues through print and digital publishing products, in French and English, of various types, such as newspapers, educational books, specialized publications for professionals, retail promotional content, mass and personalized marketing, mobile and interactive applications, and geotargeted door-to-door and digital distribution services.

TCL.A Chart

TCL.A data by YCharts

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Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Recent valuations of the components of the Dow Jones Industrial Average are available for free members, including this one of Microsoft Corporation.  In addition, here is a post detailing what can be found within each individual company’s valuation.

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[not-level-free]

Downloadable PDF version of this valuation:

ModernGraham Valuation of TSE-TCL.A – April 2017

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $1,850,861,058 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.66 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 586.61% Pass
6. Moderate PEmg Ratio PEmg < 20 11.24 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.69 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.66 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.65 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg $2.15
MG Growth Estimate 15.00%
MG Value $82.78
Opinion Undervalued
MG Grade B-
MG Value based on 3% Growth $31.18
MG Value based on 0% Growth $18.28
Market Implied Growth Rate 1.37%
Current Price $24.16
% of Intrinsic Value 29.19%

Transcontinental Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, low current ratio, insufficient earnings stability over the last ten years. The Enterprising Investor has concerns regarding the level of debt relative to the net current assets, and the lack of earnings stability over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $-0.2 in 2013 to an estimated $2.15 for 2017. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.37% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Transcontinental Inc. revealed the company was trading below its Graham Number of $28.17. The company pays a dividend of $0.74 per share, for a yield of 3.1%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 11.24, which was below the industry average of 12.64, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-4.57.

Transcontinental Inc. performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$4.57
Graham Number $28.17
PEmg 11.24
Current Ratio 1.66
PB Ratio 1.69
Current Dividend $0.74
Dividend Yield 3.06%
Number of Consecutive Years of Dividend Growth 15

[/not-level-free]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 1/1/2017
Total Current Assets $532,800,000
Total Current Liabilities $321,700,000
Long-Term Debt $347,800,000
Total Assets $1,995,800,000
Intangible Assets $720,100,000
Total Liabilities $886,300,000
Shares Outstanding (Diluted Average) 77,400,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.46
Oct2016 $1.88
Oct2015 $3.35
Oct2014 $1.34
Oct2013 -$0.30
Oct2012 -$2.27
Oct2011 $1.49
Oct2010 $2.06
Oct2009 -$1.02
Oct2008 $0.08
Oct2007 $1.42
Oct2006 $1.56
Oct2005 $1.55
Oct2004 $1.44
Oct2003 $1.60
Oct2002 $1.45
Oct2001 $0.26
Oct2000 $0.82
Oct1999 $0.61
Oct1998 $0.53
Oct1997 $0.44

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.15
Oct2016 $1.60
Oct2015 $1.21
Oct2014 $0.25
Oct2013 -$0.20
Oct2012 -$0.08
Oct2011 $0.95
Oct2010 $0.72
Oct2009 $0.28
Oct2008 $1.02
Oct2007 $1.50
Oct2006 $1.53
Oct2005 $1.43
Oct2004 $1.29
Oct2003 $1.12
Oct2002 $0.83
Oct2001 $0.53

Recommended Reading:

Other ModernGraham posts about the company

None. This is the first time ModernGraham has covered the company.

Other ModernGraham posts about related companies

News Corp Valuation – Initial Coverage $NWS
Scholastic Corp Valuation – Initial Coverage $SCHL
Tegna Inc. Valuation – November 2015 Update $TGNA
Tegna Inc. Analysis – August 2015 Update $TGNA
Gannett Company Inc. Annual Valuation – 2014 $GCI
Gannett Co. Inc. (GCI) Quarterly Valuation – May 2014

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Norfolk Southern Corp Valuation – December 2016 $NSC

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – December 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Norfolk Southern Corp (NSC) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Norfolk Southern Corporation is a holding company engaged in the rail transportation business. The Company operates approximately 20,000 miles of road primarily in the East and Midwest. The Company is engaged in the rail transportation of raw materials, intermediate products and finished goods primarily in the Southeast, East and Midwest. The Company, through interchange with rail carriers, to and from the rest of the United States. The Company also transports overseas freight through various Atlantic and Gulf Coast ports. It provides logistics services and offers the intermodal network in the eastern half of the United States. The Company’s system reaches various manufacturing plants, electric generating facilities, mines, distribution centers and other businesses located in its service area. The Company’s intermodal market group consists of shipments moving in trailers, domestic and international containers, and RoadRailer equipment.

NSC Chart

NSC data by YCharts

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To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Recent valuations of the components of the Dow Jones Industrial Average are available for free members, including this one of Microsoft Corporation.  In addition, here is a post detailing what can be found within each individual company’s valuation.

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ModernGraham Valuation of NSC – December 2016

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $32,090,112,033 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.04 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 54.38% Pass
6. Moderate PEmg Ratio PEmg < 20 19.57 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.61 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.04 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 112.41 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg $5.61
MG Growth Estimate 2.86%
MG Value $79.80
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $81.36
MG Value based on 0% Growth $47.70
Market Implied Growth Rate 5.54%
Current Price $109.83
% of Intrinsic Value 137.64%

Norfolk Southern Corp. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high PB ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $4.71 in 2012 to an estimated $5.61 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 5.54% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Norfolk Southern Corp. revealed the company was trading above its Graham Number of $72.03. The company pays a dividend of $2.36 per share, for a yield of 2.1%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 19.57, which was above the industry average of 18.13. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-67.59.

Norfolk Southern Corp. scores quite poorly in the ModernGraham grading system, with an overall grade of D.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$67.59
Graham Number $72.03
PEmg 19.57
Current Ratio 1.04
PB Ratio 2.61
Current Dividend $2.36
Dividend Yield 2.15%
Number of Consecutive Years of Dividend Growth 15

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Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2016
Total Current Assets $2,317,000,000
Total Current Liabilities $2,232,000,000
Long-Term Debt $9,555,000,000
Total Assets $34,632,000,000
Intangible Assets $0
Total Liabilities $22,236,000,000
Shares Outstanding (Diluted Average) 294,700,000

Earnings Per Share History

Next Fiscal Year Estimate $5.43
Dec2015 $5.10
Dec2014 $6.39
Dec2013 $6.04
Dec2012 $5.37
Dec2011 $5.45
Dec2010 $4.00
Dec2009 $2.76
Dec2008 $4.52
Dec2007 $3.68
Dec2006 $3.57
Dec2005 $3.11
Dec2004 $2.31
Dec2003 $1.37
Dec2002 $1.18
Dec2001 $0.97
Dec2000 $0.45
Dec1999 $0.63
Dec1998 $1.93
Dec1997 $1.90
Dec1996 $2.01

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $5.61
Dec2015 $5.69
Dec2014 $5.81
Dec2013 $5.25
Dec2012 $4.71
Dec2011 $4.28
Dec2010 $3.70
Dec2009 $3.54
Dec2008 $3.77
Dec2007 $3.20
Dec2006 $2.74
Dec2005 $2.15
Dec2004 $1.53
Dec2003 $1.07
Dec2002 $0.95
Dec2001 $0.95
Dec2000 $1.09

Recommended Reading:

Other ModernGraham posts about the company

Norfolk Southern Corp Valuation – August 2016 $NSC
26 Best Stocks For Value Investors This Week – 2/6/16
Norfolk Southern Corp Valuation – February 2016 Update $NSC
10 Undervalued Companies for the Defensive Dividend Stock Investor – February 2016
10 Undervalued Companies for the Defensive Dividend Stock Investor – September 2015

Other ModernGraham posts about related companies

Norfolk Southern Corp Valuation – August 2016 $NSC
CSX Corporation Valuation – August 2016 $CSX
Union Pacific Corp Valuation – August 2016 $UNP
Norfolk Southern Corp Valuation – February 2016 Update $NSC
CSX Corporation Valuation – February 2016 Update $CSX
Union Pacific Corporation Valuation – February 2016 Update $UNP
Norfolk Southern Corporation Analysis – September 2015 Update $NSC
Kansas City Southern Analysis – August 2015 Update $KSU
CSX Corporation Annual Valuation – 2014 $CSX
Union Pacific Corporation Annual Valuation – 2014 $UNP

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Ensco PLC Valuation – August 2016 $ESV

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – August 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Ensco PLC (ESV) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Ensco plc is an offshore contract drilling company. The Company provides offshore contract drilling services to the international oil and gas industry. The Company’s segments include Floaters, Jackups and Other. Its Floaters segment includes the Company’s drillships and semisubmersible rigs, and provides contract drilling. The Jackups segments provide contract drilling. The Other segment consists of management services on rigs owned by third parties. It owns and operates an offshore drilling rig fleet of over 60 rigs, including approximately four rigs under construction. Its rig fleet includes approximately 10 drill ships, over 10 semisubmersible rigs, approximately three moored semisubmersible rigs and over 40 jackup rigs. Of its approximately 70 rigs, approximately 30 are located in the Middle East, Africa and Asia Pacific, over 20 are located in North and South America (including Brazil), and approximately 20 are located in Europe and the Mediterranean.

ESV Chart

ESV data by YCharts

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Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Recent valuations of the components of the Dow Jones Industrial Average are available for free members, including this one of Microsoft Corporation.  In addition, here is a post detailing what can be found within each individual company’s valuation.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of ESV – August 2016

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $2,338,606,852 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 4.18 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -204.84% Fail
6. Moderate PEmg Ratio PEmg < 20 -2.43 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.28 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 4.18 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.52 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

Stage 2: Determination of Intrinsic Value

ESV value chart August 2016

EPSmg -$3.22
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth -$46.62
MG Value based on 0% Growth -$27.33
Market Implied Growth Rate -5.46%
Current Price $7.80
% of Intrinsic Value N/A

ENSCO PLC does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability or growth over the last ten years, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the net current assets, and the lack of earnings stability or growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $4.58 in 2012 to an estimated $-3.22 for 2016. This level of negative earnings does not support a positive valuation.As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into ENSCO PLC revealed the company was trading below its Graham Number of $38.7. The company pays a dividend of $0.32 per share, for a yield of 4.1%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was -2.43, which was below the industry average of 55.24, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-11.7.

ENSCO PLC receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

ESV charts August 2016

Net Current Asset Value (NCAV) -$11.70
Graham Number $38.70
PEmg -2.43
Current Ratio 4.18
PB Ratio 0.28
Current Dividend $0.32
Dividend Yield 4.10%
Number of Consecutive Years of Dividend Growth 0

[/not-level-free]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2016
Total Current Assets $2,554,700,000
Total Current Liabilities $610,800,000
Long-Term Debt $4,905,600,000
Total Assets $13,765,000,000
Intangible Assets $0
Total Liabilities $5,885,100,000
Shares Outstanding (Diluted Average) 284,600,000

Earnings Per Share History

Next Fiscal Year Estimate $2.55
Dec2015 -$6.88
Dec2014 -$16.88
Dec2013 $6.07
Dec2012 $5.04
Dec2011 $3.08
Dec2010 $4.06
Dec2009 $5.48
Dec2008 $8.02
Dec2007 $6.73
Dec2006 $5.04
Dec2005 $1.87
Dec2004 $0.62
Dec2003 $0.66
Dec2002 $0.33
Dec2001 $1.50
Dec2000 $0.61
Dec1999 $0.00
Dec1998 $1.81
Dec1997 $1.63
Dec1996 $0.72

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate -$3.22
Dec2015 -$4.70
Dec2014 -$2.32
Dec2013 $4.89
Dec2012 $4.58
Dec2011 $4.72
Dec2010 $5.65
Dec2009 $6.11
Dec2008 $5.77
Dec2007 $4.09
Dec2006 $2.41
Dec2005 $1.06
Dec2004 $0.69
Dec2003 $0.69
Dec2002 $0.75
Dec2001 $1.01
Dec2000 $0.83

Recommended Reading:

Other ModernGraham posts about the company

Ensco plc Analysis – 2015 Update $ESV
19 Companies in the Spotlight This Week – 7/26/14
Ensco plc Annual Valuation – 2014 $ESV
5 Companies to Research with the Lowest PEmg Ratios for Defensive Investors – June 2014
5 Lowest PEmg Companies for the Defensive Investor

Other ModernGraham posts about related companies

Tidewater Inc Valuation – August 2016 $TDW
Occidental Petroleum Corp Valuation – August 2016 $OXY
Valero Energy Corporation – August 2016 $VLO
Chevron Corp Valuation – August 2016 $CVX
Exxon Mobil Corporation Valuation – August 2016 $XOM
National-Oilwell Varco Inc Valuation – August 2016 $NOV
Newfield Exploration Co Valuation – August 2016 $NFX
EOG Resources Inc Valuation – July 2016 $EOG
Noble Corp PLC Valuation – July 2016 $NE
Baker Hughes Inc Valuation – July 2016 $BHI

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Norfolk Southern Corp Valuation – August 2016 $NSC

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Companies Benjamin Graham Would Invest In Today - July 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Norfolk Southern Corp (NSC) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Norfolk Southern Corporation is a holding company engaged in the rail transportation business. The Company operates approximately 20,000 miles of road primarily in the East and Midwest. The Company is engaged in the rail transportation of raw materials, intermediate products and finished goods primarily in the Southeast, East and Midwest. The Company, through interchange with rail carriers, to and from the rest of the United States. The Company also transports overseas freight through various Atlantic and Gulf Coast ports. It provides logistics services and offers the intermodal network in the eastern half of the United States. The Company’s system reaches various manufacturing plants, electric generating facilities, mines, distribution centers and other businesses located in its service area. The Company’s intermodal market group consists of shipments moving in trailers, domestic and international containers, and RoadRailer equipment.

NSC Chart

NSC data by YCharts

[level-free]

To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
[not-level-free]

Downloadable PDF version of this valuation:

ModernGraham Valuation of NSC – August 2016

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $25,878,025,539 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.06 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 52.65% Pass
6. Moderate PEmg Ratio PEmg < 20 16.02 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.15 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.06 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 72.34 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

NSC value chart August 2016

EPSmg $5.55
MG Growth Estimate 2.66%
MG Value $76.66
Opinion Overvalued
MG Grade B-
MG Value based on 3% Growth $80.45
MG Value based on 0% Growth $47.16
Market Implied Growth Rate 3.76%
Current Price $88.88
% of Intrinsic Value 115.94%

Norfolk Southern Corp. qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the low current ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $4.71 in 2012 to an estimated $5.55 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 3.76% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Norfolk Southern Corp. revealed the company was trading above its Graham Number of $70.21. The company pays a dividend of $2.36 per share, for a yield of 2.7%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 16.02, which was below the industry average of 18.13, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-66.83.

Norfolk Southern Corp. performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

NSC charts August 2016

Net Current Asset Value (NCAV) -$66.83
Graham Number $70.21
PEmg 16.02
Current Ratio 1.06
PB Ratio 2.15
Current Dividend $2.36
Dividend Yield 2.66%
Number of Consecutive Years of Dividend Growth 15

[/not-level-free]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2016
Total Current Assets $2,239,000,000
Total Current Liabilities $2,107,000,000
Long-Term Debt $9,549,000,000
Total Assets $34,334,000,000
Intangible Assets $0
Total Liabilities $22,061,000,000
Shares Outstanding (Diluted Average) 296,600,000

Earnings Per Share History

Next Fiscal Year Estimate $5.24
Dec2015 $5.10
Dec2014 $6.39
Dec2013 $6.04
Dec2012 $5.37
Dec2011 $5.45
Dec2010 $4.00
Dec2009 $2.76
Dec2008 $4.52
Dec2007 $3.68
Dec2006 $3.57
Dec2005 $3.11
Dec2004 $2.31
Dec2003 $1.37
Dec2002 $1.18
Dec2001 $0.97
Dec2000 $0.45
Dec1999 $0.63
Dec1998 $1.93
Dec1997 $1.90
Dec1996 $2.03

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $5.55
Dec2015 $5.69
Dec2014 $5.81
Dec2013 $5.25
Dec2012 $4.71
Dec2011 $4.28
Dec2010 $3.70
Dec2009 $3.54
Dec2008 $3.77
Dec2007 $3.20
Dec2006 $2.74
Dec2005 $2.15
Dec2004 $1.53
Dec2003 $1.07
Dec2002 $0.95
Dec2001 $0.95
Dec2000 $1.09

Recommended Reading:

Other ModernGraham posts about the company

26 Best Stocks For Value Investors This Week – 2/6/16
Norfolk Southern Corp Valuation – February 2016 Update $NSC
10 Undervalued Companies for the Defensive Dividend Stock Investor – February 2016
10 Undervalued Companies for the Defensive Dividend Stock Investor – September 2015
15 Best Stocks For Value Investors This Week – 9/12/15

Other ModernGraham posts about related companies

CSX Corporation Valuation – August 2016 $CSX
Union Pacific Corp Valuation – August 2016 $UNP
Norfolk Southern Corp Valuation – February 2016 Update $NSC
CSX Corporation Valuation – February 2016 Update $CSX
Union Pacific Corporation Valuation – February 2016 Update $UNP
Norfolk Southern Corporation Analysis – September 2015 Update $NSC
CSX Corporation Valuation – February 2016 Update $CSX
Union Pacific Corporation Valuation – February 2016 Update $UNP
Norfolk Southern Corporation Analysis – September 2015 Update $NSC
Kansas City Southern Analysis – August 2015 Update $KSU

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Norfolk Southern Corp Valuation – February 2016 Update $NSC

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Companies Benjamin Graham Would Invest In Today – February 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Norfolk Southern Corp (NSC) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Norfolk Southern Corporation is a holding company. The Company owns a freight railroad, Norfolk Southern Railway Company. The Company is engaged in the rail transportation of raw materials, intermediate products and finished goods primarily in the Southeast, East and Midwest and through interchange with rail carriers, to and from the rest of the United States. The Company also transports overseas freight through various Atlantic and Gulf Coast ports. It provides logistics services and offers an intermodal network in the eastern half of the United States. The Company’s system reaches various individual industries, electric generating facilities, mines, distribution centers, transload facilities and other businesses located in its service area. The Company’s general merchandise market group is composed of five commodity groupings: chemicals; metals and construction; agriculture, consumer products, and Government; automotive, and paper, clay and forest products.

[level-free]

To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
[not-level-free]

Downloadable PDF version of this valuation:

ModernGraham Valuation of NSC – February 2016

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $20,794,492,699 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.18 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 54.28% Pass
6. Moderate PEmg Ratio PEmg < 20 11.95 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.63 Pass
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.18 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 23.37 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

NSC value Chart February 2016

EPSmg $5.58
MG Growth Estimate 2.76%
MG Value $78.23
Opinion Fairly Valued
MG Value based on 3% Growth $80.91
MG Value based on 0% Growth $47.43
Market Implied Growth Rate 1.73%
Current Price $66.70
% of Intrinsic Value 85.27%

Norfolk Southern Corp qualifies for both the Enterprising Investor and the more conservative Defensive Investor.  The Defensive Investor is only concerned by the low current ratio, and the Enterprising Investor is willing to overlook concerns regarding the level of debt relative to the current assets because the company meets the more stringent Defensive Investor requirements.  As a result, all value investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research.

As for a valuation, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $4.71 in 2012 to an estimated $5.58 for 2016.  This level of demonstrated earnings growth supports the market’s implied estimate of 1.73% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

Stage 3: Information for Further Research

NSC Charts February 2016

Net Current Asset Value (NCAV) -$65.11
Graham Number $67.77
PEmg 11.95
Current Ratio 1.18
PB Ratio 1.63
Dividend Yield 3.51%
Number of Consecutive Years of Dividend Growth 15

 

[/not-level-free]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information Dec2015
Total Current Assets $2,633,000,000
Total Current Liabilities $2,231,000,000
Long-Term Debt $9,393,000,000
Total Assets $34,260,000,000
Intangible Assets $0
Total Liabilities $22,072,000,000
Shares Outstanding (Diluted Average) 298,570,000

Earnings Per Share History

Next Fiscal Year Estimate $5.00
Dec2015 $5.52
Dec2014 $6.39
Dec2013 $6.04
Dec2012 $5.37
Dec2011 $5.45
Dec2010 $4.00
Dec2009 $2.76
Dec2008 $4.52
Dec2007 $3.68
Dec2006 $3.57
Dec2005 $3.11
Dec2004 $2.31
Dec2003 $1.37
Dec2002 $1.18
Dec2001 $0.97
Dec2000 $0.45
Dec1999 $0.63
Dec1998 $1.93
Dec1997 $1.90
Dec1996 $2.01

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $5.58
Dec2015 $5.83
Dec2014 $5.81
Dec2013 $5.25
Dec2012 $4.71
Dec2011 $4.28
Dec2010 $3.70
Dec2009 $3.54
Dec2008 $3.77
Dec2007 $3.20
Dec2006 $2.74
Dec2005 $2.15
Dec2004 $1.53
Dec2003 $1.07
Dec2002 $0.95
Dec2001 $0.95
Dec2000 $1.09

Recommended Reading:

Other ModernGraham posts about the company

10 Undervalued Companies for the Defensive Dividend Stock Investor – February 2016
23 Companies to Research This Week – 9/13/14
Norfolk Southern Corporation Annual Stock Valuation – 2014 $NSC
20 Companies in the Research Spotlight This Week – June 7, 2014
Norfolk Southern Corp Quarterly Valuation – June 2014 $NSC

Other ModernGraham posts about related companies

CSX Corporation Valuation – February 2016 Update $CSX
Union Pacific Corporation Valuation – February 2016 Update $UNP
Norfolk Southern Corporation Analysis – September 2015 Update $NSC
Kansas City Southern Analysis – August 2015 Update $KSU
CSX Corporation Annual Valuation – 2014 $CSX
Union Pacific Corporation Annual Valuation – 2014 $UNP
Norfolk Southern Corporation Annual Stock Valuation – 2014 $NSC
Kansas City Southern Annual Valuation – 2014 $KSU
Norfolk Southern Corp Quarterly Valuation – June 2014 $NSC

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Norfolk Southern Corporation Analysis – September 2015 Update $NSC

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Most Undervalued Companies for the Defensive Investor – August 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Norfolk Southern Corporation (NSC) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Norfolk Southern Corporation is a holding company. The Company owns a freight railroad, Norfolk Southern Railway Company. The Company is engaged in the rail transportation of raw materials, intermediate products and finished goods primarily in the Southeast, East and Midwest and through interchange with rail carriers, to and from the rest of the United States. The Company also transports overseas freight through various Atlantic and Gulf Coast ports. It provides logistics services and offers an intermodal network in the eastern half of the United States. The Company’s system reaches various individual industries, electric generating facilities, mines, distribution centers, transload facilities and other businesses located in its service area. The Company’s general merchandise market group is composed of five commodity groupings: chemicals; metals and construction; agriculture, consumer products, and Government; automotive, and paper, clay and forest products.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of NSC – September 2015

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end Pass
6. Moderate PEmg Ratio PEmg < 20 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 Pass
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

NSC value Chart September 2015

EPSmg $5.69
MG Growth Estimate 4.92%
MG Value $104.31
Opinion Fairly Valued
MG Value based on 3% Growth $82.48
MG Value based on 0% Growth $48.35
Market Implied Growth Rate 2.69%
Current Price $78.90
% of Intrinsic Value 75.64%

Norfolk Southern Corporation qualifies for both the Defensive Investor and the Enterprising Investor.  The Defensive Investor’s only initial concern is the low current ratio while the Enterprising Investor is willing to overlook concerns with the level of debt because the company passes the more stringent Defensive Investor requirements.  As a result, all value investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company.

As for a valuation, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $4.28 in 2011 to an estimated $5.69 for 2015.  This level of demonstrated earnings growth supports the market’s implied estimate of 2.69% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Norfolk Southern Corporation (NSC)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Stage 3: Information for Further Research

NSC Charts September 2015

Net Current Asset Value (NCAV) -$62.13
Graham Number $67.74
PEmg 13.87
Current Ratio 1.10
PB Ratio 1.98
Dividend Yield 2.94%
Number of Consecutive Years of Dividend Growth 14

 

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Google Finance MSN Money
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GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Total Current Assets $2,413,000,000
Total Current Liabilities $2,203,000,000
Long-Term Debt $8,890,000,000
Total Assets $33,310,000,000
Intangible Assets $0
Total Liabilities $21,233,000,000
Shares Outstanding (Diluted Average) 302,900,000

Earnings Per Share History

Next Fiscal Year Estimate $5.09
Dec14 $6.39
Dec13 $6.04
Dec12 $5.37
Dec11 $5.45
Dec10 $4.00
Dec09 $2.76
Dec08 $4.52
Dec07 $3.68
Dec06 $3.57
Dec05 $3.11
Dec04 $2.31
Dec03 $1.37
Dec02 $1.18
Dec01 $0.97
Dec00 $0.45
Dec99 $0.63
Dec98 $1.93
Dec97 $1.90
Dec96 $2.03
Dec95 $1.81

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $5.69
Dec14 $5.81
Dec13 $5.25
Dec12 $4.71
Dec11 $4.28
Dec10 $3.70
Dec09 $3.54
Dec08 $3.77
Dec07 $3.20
Dec06 $2.74
Dec05 $2.15
Dec04 $1.53
Dec03 $1.07
Dec02 $0.95
Dec01 $0.95
Dec00 $1.09
Dec99 $1.50

Recommended Reading:

Other ModernGraham posts about the company

23 Companies to Research This Week – 9/13/14
Norfolk Southern Corporation Annual Stock Valuation – 2014 $NSC
20 Companies in the Research Spotlight This Week – June 7, 2014
Norfolk Southern Corp Quarterly Valuation – June 2014 $NSC
16 Companies in the Spotlight This Week – 3/8/14

Other ModernGraham posts about related companies

Kansas City Southern Analysis – August 2015 Update $KSU
CSX Corporation Annual Valuation – 2014 $CSX
Union Pacific Corporation Annual Valuation – 2014 $UNP
Norfolk Southern Corporation Annual Stock Valuation – 2014 $NSC
Kansas City Southern Annual Valuation – 2014 $KSU
Norfolk Southern Corp Quarterly Valuation – June 2014 $NSC

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Ensco plc Analysis – 2015 Update $ESV

ENSCO_LogoBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Most Undervalued Companies for the Defensive Investor – July 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Ensco PLC (ESV) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Ensco plc (Ensco) is a global offshore contract drilling company. The Company provides offshore contract drilling services to the international oil and gas industry. The Company operates in three segments: Floaters, which includes its drill ships and semisubmersible rigs; Jackups and Other, which consists of management services on rigs owned by third-parties. Its Floaters and Jackups segments provide contract drilling. It owns and operates an offshore drilling rig fleet of around 70 rigs, including seven rigs under construction, with drilling operations in markets around the globe. Its rig fleet includes around 10 drill ships, 13 semisubmersible rigs, five moored semisubmersible rigs and 42 jackup rigs. Of its 70 rigs, around 17 are located in North and South America, 17 are located in the Middle East and Africa, 17 are located in the Asia Pacific rim (including five rigs under construction), 15 are located in Europe and the Mediterranean and fits are located in Brazil.

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Defensive Investor – must pass at least 6 of the following 7 tests: Score = 3/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion - PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 - PASS
  3. Earnings Stability – positive earnings per share for at least 10 straight years - FAIL
  4. Dividend Record – has paid a dividend for at least 10 straight years - PASS
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period - FAIL
  6. Moderate PEmg ratio – PEmg is less than 20 - FAIL
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 - FAIL

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 2/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 - PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 - FAIL
  3. Earnings Stability – positive earnings per share for at least 5 years - FAIL
  4. Dividend Record – currently pays a dividend - PASS
  5. Earnings growth – EPSmg greater than 5 years ago - FAIL

Valuation Summary

Key Data:

MG Value $0.00
MG Opinion Overvalued
Net Current Asset Value (NCAV) -$20.65
Current Ratio 2.69
PB Ratio 0.51

Balance Sheet – March 2015

Current Assets $3,054,000,000
Current Liabilities $1,134,000,000
Total Debt $5,919,000,000
Total Assets $16,346,000,000
Intangible Assets $317,000,000
Total Liabilities $7,842,000,000
Outstanding Shares 231,900,000

Earnings Per Share

2015 (estimate) $3.11
2014 -$16.88
2013 $6.07
2012 $5.04
2011 $3.08
2010 $4.06
2009 $5.48
2008 $8.02
2007 $6.73
2006 $5.04
2005 $1.87

Earnings Per Share – ModernGraham

2015 (estimate) -$1.37
2014 -$2.32
2013 $4.89
2012 $4.58
2011 $4.72
2010 $5.65

Dividend History

Free Cash Flow

Conclusion:

Ensco PLC does not qualify for either the Defensive Investor and the Enterprising Investor.  The Defensive Investor is concerned with the low current ratio, high PEmg and PB ratios, as well as the insufficient earnings stability or growth over the last ten years.  The Enterprising Investor is concerned with the level of debt relative to the net current assets, and the lack of earnings stability or growth over the last five years.  As a result, all value investors following the ModernGraham approach based on Benjamin Graham’s methods should explore other opportunities or proceed with a speculative attitude.  As for a valuation, the company appears to be overvalued after seeing its EPSmg (normalized earnings) drop from a gain of $4.72 in 2011 to an estimated loss of $1.37 for 2015.  This lack of earnings growth and current negative EPSmg leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value falling below the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Ensco PLC (ESV)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

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