Why We’re Revising Our Price Estimate For Norfolk Southern To $86

-10.40%
Downside
256
Market
230
Trefis
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Norfolk Southern

We are raising our price estimate for Norfolk Southern by 20%, which is primarily driven by a revision to our EBITDA margin forecasts for the company. The company’s cost reduction initiatives have been extremely successful with a combination of its cost reduction initiatives and lower volume-related costs (including fuel expenses) resulting in a 630 basis point year-over-year improvement in the company’s operating ratio (operating expenses as a percentage of revenue) to 70.1% in Q1 2016. With the company targeting an improvement in its operating ratio to 65% in the long term, we have correspondingly revised upwards our margin forecasts for the company by the year 2020. This has resulted in an upward revision to our price estimate for the company.

Change in Price Estimate to $86

Have more questions about Norfolk Southern? See the links below.

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Norfolk Southern

 

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