Norfolk Southern Corp (NSC)

[Dividend Watcher]

Norfolk Southern Corp.

GICS Sector: Industrials
Sub-Industry: Railroads

In this installment, I am looking at Norfolk Southern as part of the railroad industry in general. In 2025, Union Pacific  (UPN) announced its intention to acquire or merge with NSC to create the first transnational railroad company in the U.S.

My wife and I own shares in both companies and I'm not so keen on the merger of 2 of the 4 remaining class 1 railroads. What is it going to do the competition in the field and also the inflated costs involved with the merger. As a result, I've started a closer look at all the public railroad companies in North America.

About Norfolk Southern

From their latest annual report for 2024:

Quote:Since 1827, Norfolk Southern Corporation (NYSE: NSC) and its predecessor companies have safely moved the goods and materials that drive the U.S. economy. Today, it operates a 22-state freight transportation network. Committed to furthering sustainability, Norfolk Southern helps its customers avoid approximately 15 million tons of yearly carbon emissions by shipping via rail. Its dedicated team members deliver approximately 7 million carloads annually, from agriculture to consumer goods. Norfolk Southern also has the most extensive intermodal network in the eastern U.S. It serves a majority of the country’s population and manufacturing base, with connections to every major container port on the Atlantic coast as well as major ports across the Gulf Coast and Great Lakes.

The Merger

The proxy statement about the merger is available on both the NSC and UPN investor relations page. Basically, a NSC shareholder will receive 1 new share of UPN along with a cash payment pf US$88.82 for each share of NSC you own.

My Spreadsheet

Attached to this thread is the latest copy of my analysis spreadsheet on NSC. I've added a few features from previous additions.

• I've added railroad specific statistics for any railroad analysis sheets. Unfortunately, NSC does not provide these in their annual reports. The only one in this spreadsheet is the Operating Ratio which is simply Operating Expenses divided by Revenues and is easily calculated. This is supposedly used to evaluate their efficiency but I'll argue you can get that information elsewhere in the financial statements. Other railroads may provide more relevant information that I will include.
  
• Revenue is broken down into the different categories of products transported. Usually this does not total 100% of GAAP reported revenues as there are miscellaneous other sources also. I just wanted to get a feel for which sectors of the economy make up their sales.
  
• Lastly, I've added a graph to the share price history tab. This is a rough version of the FastGraphs graph with data points based on the previous years' results. If you don't like it, you can just delete it. It just helps me look at valuation.
  

I'd appreciate any feedback or thoughts on improving these spreadsheets.

Disclosure:

My wife has shares of NSC in her IRA. We've sold some since the merger was announced to diversify her portfolio.