NSC – Market expectations are for Uniform ROA to sustain peaks, but management may be concerned about their asset efficiency, strategies, and macro environment

• Norfolk Southern Corporation (NSC:USA) currently trades near corporate averages relative to UAFRS-based (Uniform) earnings, with a 20.8x Uniform P/E. At these levels, the market has expectations for stable, record profitability, but management may be concerned about their operating ratio, strategic plans, and macro environment
  
  

• Specifically, management may lack confidence in their ability to transform their railroad while improving their service product, sustain their record operating ratio, and carry over business improvements and momentum from their record full year results into 2020 and beyond. Furthermore, they may have concerns about their GDP growth rate expectations and coal price pressures. In addition, management may be concerned about the challenging volume environment, pay rate inflation, and high incentive compensations payouts. Moreover, they may lack confidence in their ability to maximize asset usage, sustain free cash flow, and maintain record train performance and terminal dwell