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If You Invested $1000 in Norfolk Southern a Decade Ago, This is How Much It'd Be Worth Now

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For most investors, how much a stock's price changes over time is important. Not only can it impact your investment portfolio, but it can also help you compare investment results across sectors and industries.

The fear of missing out, or FOMO, also plays a factor in investing, especially with particular tech giants, as well as popular consumer-facing stocks.

What if you'd invested in Norfolk Southern (NSC - Free Report) ten years ago? It may not have been easy to hold on to NSC for all that time, but if you did, how much would your investment be worth today?

Norfolk Southern's Business In-Depth

With that in mind, let's take a look at Norfolk Southern's main business drivers.

Norfolk Southern Corporation, incorporated on Jul 23, 1980, under the laws of the Commonwealth of Virginia, controls a major freight railroad, Norfolk Southern Railway Company. The company is primarily engaged in the rail transportation of raw material, intermediate products and finished goods, primarily in Southeast, East and Midwest United States and, via interchange with rail carriers to and from the rest of country.

Norfolk Southern also transports overseas freight through several Atlantic and Gulf Coast ports. Norfolk Southern provides comprehensive logistics services and offers the most extensive intermodal network on the eastern side of the United States.

The company’s fiscal year coincides with the calendar year. At 2020-end, the company was responsible for operating approximately 19,300 route miles in 22 states and the District of Columbia.

The company, currently based in Norfolk, VA, announced in December 2018, that it will shift headquarters to Atlanta. In 2019, launched the construction of its building in Atlanta.

Norfolk Southern derives freight revenues from transporting coal, general merchandise and intermodal (truck, rail and ship) containers:

Coal business includes transportation of utility coal, export coal and domestic metallurgical coal from mines to electricity generating plants. The sector accounted for 10.7% of 2020 revenues.

General Merchandise business includes transportation of automotive, chemicals, metals and construction, agriculture, consumer products, and paper, clay and forest products (lumber and wood). Chemicals include sulfur and related chemicals, petroleum products. Agriculture, consumer products, and government includes soybeans, wheat, corn, fertilizer, livestock. Metals and construction includes steel, aluminum products, machinery, scrap metals, cement, aggregates, sand, and minerals. The sector accounted for 62.2% of the 2020 revenues recorded by the company.

The Intermodal segment is responsible for haulage of international container cargo from steamship companies and truckload carriers. The sector accounted for 27.1% of the 2020 revenues recorded by the company.

Bottom Line

While anyone can invest, building a lucrative investment portfolio takes research, patience, and a little bit of risk. If you had invested in Norfolk Southern ten years ago, you're probably feeling pretty good about your investment today.

According to our calculations, a $1000 investment made in August 2011 would be worth $3,953.83, or a gain of 295.38%, as of August 17, 2021, and this return excludes dividends but includes price increases.

In comparison, the S&P 500 gained 275.58% and the price of gold went up -4.13% over the same time frame.

Analysts are anticipating more upside for NSC.

Norfolk Southern reported better-than-expected earnings per share as well as revenues for second-quarter 2021. Also, both metrics increased year over year. Results were aided by the recovery in overall volumes as economic activities pick up the pace.  We are also impressed by the company's efforts to reward its shareholders through dividends and buybacks even in the current scenario. Norfolk Southern's strong free cash flow generating ability (up 44% in first-half 2021) supports its shareholder-friendly activities. In July, the company announced a 10% increase in its quarterly dividend payout. However, escalation in fuel costs (up 124%) as oil prices move north adversely impacted second-quarter results, inducing an 11% rise in operating expenses. Moreover, volumes with respect to utility coal are likely to decline year over year in 2021.

The stock has jumped 6.27% over the past four weeks. Additionally, no earnings estimate has gone lower in the past two months, compared to 7 higher, for fiscal 2021; the consensus estimate has moved up as well.

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