Applied Business Project 1 – Financial Analysis

Name: Winters, Nicholas (nicholaswinters)

Project:ABP-1 – Financial Analysis

Section 1: Current Company Profile

Table 1 Corporate Governance

Table 2 Financial Portfolio

NSC Fundamentals

Norfolk Southern Corporation (NSC) is a company that controls a railroad and is in charge or the transportation of intermediate products, raw materials, and finished goods to parts of the United States. Two of its competing companies are CSX Corporation (CSX) and Union Pacific Corporation (UNP). Both companies are transportation related companies that span across the US. NSC and CSX are both very similar companies based on investment perspective. These two companies have a Market Capitalization within two billion of each other and about two thirds of the shares in each company is owned by institutions. The biggest difference between these two companies is the 52-week price range. NSC is a little more than three times the price of CSX. The difference between NSC and UNP is that UNP’s value in the stock market is three times more and 81% of it is owned by institutions. The three companies are very similar in what they do, however, UNP is clearly the largest and most successful.

Section 2: Historical Stock Analysis and Fundamentals

Historical Stock Analysis

NSC Stock Analysis

All railroad companies have been burdened with the new issue of the severe droughts that are taking over the United States. Droughts are currently affecting 46.1% of the US. The droughts cause farmers to grow less produce because there is less water and the water then costs significantly more. The article that I used about this issue is a website that discusses situations that businesses are in whether they are good or bad. This issue has not had an impact on the NSC company because it is a fairly new issue. I think that as this issue gets progressively worse over time it will lower the value of the companies’ stock. However, the value of this company has only been going up recently so it might be becoming to strong to be affected by an issue of this size.

“Railroad Transport Stocks To Suffer From Impending Drought” By: Sam Quest

Section 3: Competitive Analysis

a)Stock Price Analysis Table

Competitor Comparison Data

b)Competitive Stock Price Graph

Section 4: Assessing your stock

(Be sure to change the question number, i.e., “4c”, before your answer)

4bNorfolk Southern Corporation is a company that controls a railroad that covers 20,000 miles across 22 different states and the District of Columbia. This company uses this railroad to transport goods such as raw materials, coal, general merchandise, intermodal traffic, and passenger operations. One of the main uses for the railroad is for trafficking coal within the United States. The coal trafficking section of this company made up almost a third of the total revenues in 2011. The next largest section of the company is the general merchandise trafficking. It consists of things like automotive, chemicals, metals, construction, and agriculture. This contributed to 66% of the general merchandise that Norfolk Southern Corporation was required to transport. This railroad was also used to transport domestic containers throughout the United States. This part of the companies’ transportation duties was responsible for 19% of the companies’ total revenue in 2011.

4d The Norfolk Southern Corporation has been consistently increasing in value for seven years. In the past seven years the company has grown over 218%. In the last three fiscal years the Norfolk Southern Corporation has increased in value by 62.9%. I think that because the company has over doubled in value in the last seven years and increased by a lot in the last three years that it is a good investment. It is a good investment because it has been consistently going up and does not have any signs of stopping. The company is getting more powerful by increasing the number of items that it transports on their railroad. Also, the drought in the western half of the country is forcing more of the goods to travel through the east coast.

4i The Norfolk Southern Corporation is definitely in a position to adjust inflation in order to increase and maximize profit. Norfolk Southern Corporation really only has one main competitor, Union Pacific Corporation. Union Pacific Corporation has controlled the industry for a while by maintaining a slight monopoly over competing companies. However, Norfolk Southern Corporation has caught up with Union Pacific Corporation and has taken over with a slight monopoly over the other. Norfolk Southern Corporation now has control and can change their prices to increase their profit and decrease their main competitors profit. Norfolk Southern Corporation is able to increase and decrease prices however and whenever they want without worrying about losing significant unit sales. Based on examination of the qualitative data of the company Norfolk Southern Corporation has achieved the perfect state to continue to increase the value of their company.

Winters, NicholasPage 1 of 4