NSC Stock Report

2-Year Price History

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Ockham's Rating

NSC Revenue

As we have often noted, in our valuation methodology, "Cash is King." Well, it goes without saying that if a company cannot produce sales then there is no ability to generate cash flow. By that logic we look very closely at revenue numbers as our second most important factor in valuing a company's stock. We have established reasonable Price to Sales per share ranges based on historical data of the last 10 years. For, NSC the high and low end of the Price to Sales per share ratios are 2.13x and 1.36x respectively.

Notice that NSC's current Price to Sales per share ratio is 1.34x, which is quite a bit below what we consider a normal Price to Sales ratio for this stock. Given normal conditions and a price of $39.19, NSC is 24% below where we would expect to see it. This will beneficially factor into our final analysis of NSC as it is not often that this stock sinks to these levels.

NSC Cash Earnings

As a value investment framework, Ockham Research is similar to a private equity firm in terms of our valuation methods. We are always on the lookout for value in the form of sales and cash numbers. In the case of NSC, Ockham views their current Cash Earnings as significantly below its historical average multiple of cash earnings as calculated by Ockham. Similar to our analysis of sales per share, Ockham looks at the last 10 years of cash earnings levels for NSC to identify where the current high and low price levels have been historically in relation to profit per share. Again, we utilize a weighted average methodology which relies more heavily on recent years of data. This weighted average framework provides us with an average high Price to Cash Earnings ratio per share of 10.05 and a 6.42 low over the same period.

Now that NSC’s current price is $39.19 and its Price to Cash Earnings ratio is 6.26, we are very positive on its outlook from the cash earnings perspective. In fact, NSC is now trading a full 24% below its average historical Price to Cash Earnings ratio at these profit per share levels. When our clients ask us why NSC has great long term potential, the Cash Earnings levels to current stock is one of our primary reasons. But naturally, now we need for the overall market to recognize this disparity.

NSC Dividends

When determining a company's future prospects for success, Ockham Research sees analysis of dividend payments as a key additional factor. Even though it isn't imperative for NSC to shell out a dividend in order to receive a positive rating, it can be helpful to further our analysis.

The estimated annual dividend for NSC is $1.36 producing a current dividend yield of 3.47%. Much like our evaluation of Sales and Cash Earnings per share, we review dividend yields from NSC against the historic high and low levels over all available dividend history. Because dividends are a decision made exclusively by management, we view a healthy and rising dividend as a sign of confidence and strength. The highest dividend yield from NSC over previous years was 6.71% while the lowest dividend yield was 0.96%. Management at NSC needs to get the current dividend yield above the historical median before we are comfortable from this point of view.