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Peter Lynch Guru Analysis for Norfolk Souther Corporation

NSC 
$77.64
*  
0.19
  negative  
0.25%
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*Delayed - data as of May 24, 2013 
Exchange: NYSE
Industry: Transportation
Community Rating:
 
 

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Assessments & Analysis Based on May 23, 2013 close price: $77.45

  for the P/E/Growth Investor based on the criteria of Peter Lynch. Return to NSC Guru Analysis

All Star Guru Scorecard

Source Go Chart %
Peter Lynch 72%
Benjamin Graham 43%
Validea 36%
Motley Fool 25%
David Dreman 50%
Martin Zweig 62%
Kenneth Fisher 38%
James P. O'Shaughnessy 40%

   

Detailed Analysis

Guru Score: 72%

Determine the Classification:

NSC is considered a "True Stalwart", according to this methodology, as its earnings growth of 12.27% lies within a moderate 10%-19% range and its annual sales of $10,989 million are greater than the multi billion dollar level.This methodology looks for the "Stalwart" securities to gain 30%-50% in value over a two year period if they can be purchased at an attractive price based on the P/E to Growth ratio. NSC is attractive if NSC can hold its own during a recession.


Inventory To Sales: [PASS]

When inventories increase faster than sales, it is a red flag. However an increase of up to 5% is considered bearable if all other ratios appear attractive. Inventory to sales for NSC was 1.87% last year, while for this year it is 1.96%. Since inventory to sales has not changed appreciably, NSC passes this test.


Yield adjusted P/E to Growth (PEG) ratio: [PASS]

The Yield-adjusted P/E/G ratio for NSC (.94), Based on the average of the 3, 4 and 5 year historical EPS growth rates, is O.K.


EARNINGS PER SHARE: [PASS]

The EPS for a stalwart company must be positive. NSC's EPS ($5.55) would satisfy this criterion.


Total Debt/Equity Ratio:


FREE CASH FLOW: [NEUTRAL]

The Free Cash Flow/Price ratio, though not a requirement, is considered a bonus if it is above 35%. A positive Cash Flow (the higher the better) separates a wonderfully reliable investment from a shaky one. This methodology prefers not to invest in companies that rely heavily on capital spending. This ratio for NSC (.8%) is too low to add to the attractiveness of the stock. Keep in mind, however, that it does not adversely affect the company as it is a bonus criteria.


NET CASH POSITION: [NEUTRAL]

Another bonus for a company is having a Net Cash/Price ratio above 30%. Lynch defines net cash as cash and marketable securities minus long term debt. According to this methodology, a high value for this ratio dramatically cuts down on the risk of the security. The Net Cash/Price ratio for NSC (2.7%) is too low to add to the attractiveness of this company. Keep in mind, however, that it does not adversely affect the company as it is a bonus criteria.
 
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