Value
4.3/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 4.5 |
| P/S | 6.3 |
| EV/EBITDA | 2.4 |
| Fwd P/E | 5.4 |
| PEG | 3.1 |
| Analyst target | 4.0 |
- ▸Forward P/E: 23.6x
- ▸PEG: 4.02
NSC · Why this verdict
Why Norfolk Southern (NSC) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictSELL
Overall score5.5/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
Norfolk Southern has beaten earnings four quarters in a row, is growing revenue about 11% and sits in a bullish breakout, but the stock is already above the analyst target and cash conversion is mediocre.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Margins are strong at 21% and the Piotroski F-Score is 7 of 9, though cash conversion is only 53% FCF to net income. Quality breakdown | Margins should hold near 21% while cash conversion improves toward 70%. | ↑Improving |
| CounterCash conversion is flagged as an earnings quality warning, and heavy capital needs could keep free cash flow below earnings. | ||
The company beat EPS estimates in all 4 of the last quarters, with an average surprise of about 8.3% and a 4.3% beat to $3.62 in the latest report. Earnings track record | EPS should keep meeting or beating estimates at the 28 January 2027 report. | ↓Deteriorating |
| CounterThe beat size is shrinking from 16.5% to 6.3%, 5.9% and 4.3% over the last four quarters, which suggests the easy surprises are over. | ||
Quarterly revenue of $3.465B for the June 2026 quarter is about 11% above the $3.110B of a year earlier, after several flat quarters near $3.0B. Revenue quarters | Revenue should stay above $3.4B and approach the $3.48B next-quarter estimate. | ↓Deteriorating |
| CounterRevenue was flat at about $3.0B to $3.1B for two years before the latest jump, so the increase may be a one-off rather than a new trend. | ||
Price of $329.99 is 1.7% above the $324.25 analyst target, with about 7.4% downside to the $318.83 stop. Upside pct | Analyst targets should rise above the current price if beats continue. | →Stable |
| CounterWith a negative reward-to-risk of -0.2 and an elevated put/call ratio of 5.00, a disappointing report is not cushioned by valuation. | ||
The chart shows a golden cross, price above all moving averages, RSI of 66 and a bullish MACD, with rising on-balance volume. Chart pattern detection | Price should hold above its moving averages and momentum should stay above 5.5. | ↑Improving |
| CounterBollinger and support-resistance scores are only 1.7 and 2.5, so the stock is stretched and prone to a pullback. | ||
Margins are strong at 21% and the Piotroski F-Score is 7 of 9, though cash conversion is only 53% FCF to net income.
↑ImprovingQuality breakdown
- Expectation
- Margins should hold near 21% while cash conversion improves toward 70%.
CounterCash conversion is flagged as an earnings quality warning, and heavy capital needs could keep free cash flow below earnings.
The company beat EPS estimates in all 4 of the last quarters, with an average surprise of about 8.3% and a 4.3% beat to $3.62 in the latest report.
↓DeterioratingEarnings track record
- Expectation
- EPS should keep meeting or beating estimates at the 28 January 2027 report.
CounterThe beat size is shrinking from 16.5% to 6.3%, 5.9% and 4.3% over the last four quarters, which suggests the easy surprises are over.
Quarterly revenue of $3.465B for the June 2026 quarter is about 11% above the $3.110B of a year earlier, after several flat quarters near $3.0B.
↓DeterioratingRevenue quarters
- Expectation
- Revenue should stay above $3.4B and approach the $3.48B next-quarter estimate.
CounterRevenue was flat at about $3.0B to $3.1B for two years before the latest jump, so the increase may be a one-off rather than a new trend.
Price of $329.99 is 1.7% above the $324.25 analyst target, with about 7.4% downside to the $318.83 stop.
→StableUpside pct
- Expectation
- Analyst targets should rise above the current price if beats continue.
CounterWith a negative reward-to-risk of -0.2 and an elevated put/call ratio of 5.00, a disappointing report is not cushioned by valuation.
The chart shows a golden cross, price above all moving averages, RSI of 66 and a bullish MACD, with rising on-balance volume.
↑ImprovingChart pattern detection
- Expectation
- Price should hold above its moving averages and momentum should stay above 5.5.
CounterBollinger and support-resistance scores are only 1.7 and 2.5, so the stock is stretched and prone to a pullback.
Per-dimension breakdown
Quality
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 5.6 |
| ROA | 4.0 |
| Gross margin | 4.9 |
| Op margin | 10.0 |
| Net margin | 10.0 |
| Current ratio | 3.6 |
| FCF quality | 4.7 |
| Moat | 6.1 |
| Piotroski F | 7.8 |
- ▸Strong margins: 21%
- ▸Earnings quality warning: 60% FCF/NI
- ▸Strong Piotroski F-Score: 7/9
Growth
4.6/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 5.9 |
| EPS growth | 3.3 |
Momentum
7.1/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.3 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 2.1 |
- ▸Overbought (RSI 73)
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
5.8/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 6.8 |
| Analyst rating | 5.0 |
| Price target | 5.8 |
- ▸LLM news sentiment: +0.35 (n=2)
Insider
7.3/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
- ▸Institutions accumulating
Peer rank
4.4/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 2.5 |
| quality rank | 3.8 |
| growth rank | 5.0 |
Technical
4.1/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.8 |
| support resistance | 1.4 |
| 52w position | 9.2 |
| gap | 5.0 |
Risk (lower is worse)
4.9/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.4 |
| days to cover | 1.6 |
| volatility | 7.8 |
| put call | 0.0 |
| implied vol | 7.5 |
| max pain risk | 3.0 |
| beta | 5.9 |
| debt equity | 5.0 |
- ▸Elevated put/call: 26.38
- ▸Above max pain $250
Catalyst
6.2/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 6.6 |
| dividend safety | 4.8 |
| news activity | 6.0 |
- ▸Perfect beat streak: 4Q
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (7)
- MOMENTUM:7.1>=5.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:88d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.6=NEGATIVE
Warning (0)
none
Reward-to-Risk
-0.58
Upside
-5.3%
Downside
9.0%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 4.3 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Insider at 7.3) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-0.6=NEGATIVE) reinforce the read. Current asymmetry R:R is -0.58 — supplementary context, not the trigger for this path.
The strongest dimensions are Insider at 7.3, Momentum at 7.1, and Quality at 6.3; the weakest are Technical at 4.1, Value at 4.3, and Peer rank at 4.4. The V9 engine flagged 1 failed gate, producing an asymmetric reward-to-risk of -0.58 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Perfect Earnings Beat Streak
Trip ifEPS surprise stays below 0% for 2 consecutive quarters.
- P2Revenue Growth Acceleration
Trip ifQuarterly revenue falls below $3.11B from the current $3.465B.
- P3Strong Margins Moderate Cash Conversion
Trip ifOperating and net margins average less than 15% from the current 21%.
- P4Price Above Analyst Target
Trip ifPrice falls below the $318.83 stop, a drop of more than 3.4% from $329.99.
- P5Bullish Breakout Setup
Trip ifMomentum score falls below 5.5 from the current 7.9.