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    Norfolk Southern Corporation

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 195.78

    Market price

    USD 345.68

    Implied upside

    -43.4%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2025-12-31

    AdjustedCapital expenditure runs at 18.0% of revenue against depreciation of 10.7%. A perpetuity has to be a steady state, so the forecast tapers capex to maintenance at depreciation plus the reinvestment terminal growth requires (g/ROIC of NOPAT), and the terminal year carries on from there. The bridge is shown under Terminal Value.

    Value Per Share

    Perpetuity growth
    USD 195.78-43.4%
    Exit multiple
    USD 338.73-2.0%
    Market price
    USD 345.68

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn2bn5bnFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35CAGR
    RevenueUSD 13.4bnUSD 14.2bnUSD 14.9bnUSD 15.6bnUSD 16.2bnUSD 16.9bnUSD 17.5bnUSD 18.0bnUSD 18.5bnUSD 19.0bn+3.9%
    EBITUSD 5.2bnUSD 5.5bnUSD 5.7bnUSD 6.0bnUSD 6.3bnUSD 6.5bnUSD 6.7bnUSD 6.9bnUSD 7.1bnUSD 7.3bn+3.9%
    NOPATUSD 4.1bnUSD 4.3bnUSD 4.5bnUSD 4.7bnUSD 4.9bnUSD 5.1bnUSD 5.3bnUSD 5.5bnUSD 5.6bnUSD 5.8bn+3.9%
    Add depreciation & amortisationUSD 1.4bnUSD 1.5bnUSD 1.6bnUSD 1.7bnUSD 1.7bnUSD 1.8bnUSD 1.9bnUSD 1.9bnUSD 2.0bnUSD 2.0bn+3.9%
    Less capital expenditureUSD -2.4bnUSD -2.5bnUSD -2.7bnUSD -2.8bnUSD -2.9bnUSD -3.0bnUSD -3.0bnUSD -3.1bnUSD -3.2bnUSD -3.3bn+3.3%
    Capex, % of revenue18.0%17.9%17.8%17.7%17.6%17.5%17.5%17.4%17.3%17.2%-
    Less increase in working capitalUSD -11.9mUSD -6.7mUSD -6.6mUSD -6.5mUSD -6.2mUSD -6.0mUSD -5.6mUSD -5.3mUSD -4.8mUSD -4.3m-10.6%
    Free cashflow to firmUSD 3.1bnUSD 3.3bnUSD 3.5bnUSD 3.6bnUSD 3.8bnUSD 4.0bnUSD 4.1bnUSD 4.3bnUSD 4.4bnUSD 4.6bn+4.4%
    Discount factor0.95920.88270.81220.74730.68770.63280.58230.53580.49300.4536-
    Present valueUSD 3.0bnUSD 2.9bnUSD 2.8bnUSD 2.7bnUSD 2.6bnUSD 2.5bnUSD 2.4bnUSD 2.3bnUSD 2.2bnUSD 2.1bn-
    Present Value Of The ForecastUSD 25.5bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.89%US 10-year Treasury (^TNX), 2026-11-02
    Equity risk premium4.23%Damodaran, January 2026
    Beta1.119Reported 1.177, pulled toward 1.0 (Blume)
    Cost of equity9.63%Risk-free + beta x equity risk premium
    Cost of debt5.59%Risk-free + 70bp, the spread for a A+ rating at 5.8x interest cover. Book interest / average debt was lower, at 4.6%.
    Market capitalisationUSD 77.6bn81.8% of capital
    Total debtUSD 17.3bn18.2% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC8.68%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 195.78

    57% of EV

    Forecast FCFF, final year
    USD 4.6bn
    Capex at depreciation, working capital in reinvestment
    USD 5.8bn
    Less reinvestment at g/ROIC (21.2% of NOPAT)
    USD -1.2bn
    Capitalised
    USD 4.6bn
    ROIC (reported)
    11.8%
    Terminal value, undiscounted
    USD 75.7bn
    Terminal value, discounted
    USD 34.3bn
    Enterprise value
    USD 59.8bn
    Less net debt
    USD 15.8bn
    Equity value
    USD 44.1bn

    Exit at 15.7x EBITDA

    Value per shareUSD 338.73

    72% of EV

    Terminal value, undiscounted
    USD 146.6bn
    Terminal value, discounted
    USD 66.5bn
    Enterprise value
    USD 92.0bn
    Less net debt
    USD 15.8bn
    Equity value
    USD 76.2bn

    Spread between methods: 53%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    6.68%298.27308.96322.85341.23366.23
    7.68%236.98241.34247.01254.44264.24
    8.68%192.91194.06195.78198.22201.59
    9.68%159.72159.17158.86158.84159.18
    10.68%133.85132.39131.01129.72128.55

    Outlined: this model. Green text: above today's price of 345.68. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputActualModelImplied
    Revenue growth, a year-1.5%4.5%10.0%
    EBIT margin40.8%38.5%58.8%
    Discount rate-8.7%6.4%
    Download as Excel

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    Yahoo Finance and RBA data. General information, not advice. Methodology.