Norfolk Southern

Methodology

Norfolk Southern's rail franchise generates relatively predictable earnings from contracted shipping volumes, though economic cycles and operational challenges impact profitability. Coal volume declines offset by intermodal growth create transition dynamics. The calculation works best using normalized earnings through economic cycles and adjusting for operational efficiency initiatives.

Methodology

Norfolk Southern typically trades at moderate PEG ratios reflecting steady volume growth and operating ratio improvement potential, though rails are mature businesses. The metric should account for operational efficiency progress and volume mix shifts. Compare to CSX and other Class I railroads while considering relative efficiency and network positioning.

Methodology

Norfolk Southern offers a meaningful dividend with steady growth as management balances capital returns with infrastructure investments. The dividend adds significant value to total returns for this essential infrastructure provider. PEGY better captures total return expectations for investors seeking both modest growth from volume expansion and reliable income.