NSC – Market expectations are for record-high Uniform ROA, but management has concerns about net income, costs, and productivity

• Norfolk Southern Corporation (NSC:USA) currently trades at historical averages relative to UAFRS-based (Uniform) Earnings, with a 20.6x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management has concerns about net income, costs, and productivity
• Specifically, management may lack confidence in the sustainability of record net income levels, and may have concerns about their ability to bring on resources to handle future volume growth. Furthermore, they may have concerns about increasing locomotive fuel costs, and may lack confidence in their ability to drive operating ratio improvements though their ongoing productivity initiatives