After A 2x Rally Norfolk Southern Stock Now Appears Vulnerable To Downside Risk

SectorFinancial Markets
CountryMiddle east

After a rise of over 2x from its March 2020 lows, at the current price of $253 per share, Norfolk Southern stock (NYSE: NSC), one of the largest railroad companies in the Eastern United States, appears to be fully valued. NSC stock has rallied from $118 to $253 off the March 2020 bottom compared to the S&P which moved 76%. NSC stock has outperformed the market due to better than expected quarterly results, and a rebound in transportation demand, especially Intermodal business, which accounts for roughly 28% of the company’s total top line. Also, the stock is up 22% in the last one year despite revenue falling 13% y-o-y over the last four quarters.

While the gradual opening up of the economy is expected to lead to higher demand for railroads, the stock appears to be richly valued when compared to its historical levels, making it vulnerable to downside risk. Our dashboard Buy Or Fear Norfolk Southern Stock provides more...