Norfolk Southern Corp. (NYSE:NSC)

The financial data reveals several key trends over the five-year period from 2017 to 2021. Net operating profit after taxes (NOPAT) exhibited a generally positive trajectory, increasing from 2921 million USD in 2017 to 3711 million USD in 2021, despite a noticeable decline in 2020. This dip in 2020 corresponds with a global downturn context, but the subsequent recovery in 2021 indicates a rebound in operational performance.

Invested Capital

Invested capital steadily grew each year, rising from 33,382 million USD in 2017 to 35,469 million USD in 2021. The growth rate, however, was modest, suggesting controlled expansion or investment in capital assets over the period.

Cost of Capital

The cost of capital remained relatively stable, fluctuating slightly around 15%, with a range from 14.85% to 15.31%. This stability suggests consistent market conditions and financing costs for the company during these years.

Economic Profit

Economic profit was negative in all years, although the magnitude of the loss fluctuated. The negative economic profit indicates that the company did not generate returns exceeding its cost of capital. Despite the increase in NOPAT, economic profit worsened notably in 2020 to -2739 million USD, reflecting the impact of lower operating profit coupled with sustained invested capital and cost of capital. Improvement was seen in 2021 as economic loss diminished to -1710 million USD, yet it remained below breakeven.

Overall, operational profitability improved over the period, with NOPAT increasing and invested capital expanding modestly. However, the persistent negative economic profit highlights an ongoing challenge in creating value above the cost of capital. The data suggests that while operating efficiency might have improved, capital costs and invested capital levels have constrained value creation, particularly impacted by the downturn in 2020 and partial recovery in 2021.

The financial data indicates fluctuations in key profitability measures over the five-year period ending December 31, 2021.

Net Income

The net income shows a notable decline from 2017 to 2018, dropping from 5404 million US$ to 2666 million US$. This represents a reduction of approximately 50.6%. From 2018 onwards, net income slightly increased to 2722 million US$ in 2019 but then declined again to 2013 million US$ in 2020. A recovery is observed in 2021, with net income increasing to 3005 million US$. Overall, net income has not returned to the 2017 peak by the end of the period.

Net Operating Profit After Taxes (NOPAT)

NOPAT presents a generally upward trend from 2017 through 2019, increasing from 2921 million US$ to 3546 million US$. However, in 2020, there is a decline to 2658 million US$, reflecting operational challenges or increased costs. The figure recovers significantly in 2021, reaching 3711 million US$, which is the highest level recorded during the period and exceeds the 2017 value.

The data suggests that while net income experienced volatility with an initial sharp decline and partial recovery by 2021, operational profitability as measured by NOPAT has demonstrated resilience with an overall increasing trajectory. The year 2020 marks a downturn in both measures, likely correlated with adverse external or internal factors during that period. The stronger rebound in NOPAT by 2021 compared to net income may imply improved operational efficiency or changes in non-operational factors affecting net income.

The financial data presents notable fluctuations in the income taxes and cash operating taxes over a five-year period ending December 31, 2021.

Income Taxes

The income taxes exhibit significant variability. In 2017, there was a considerable negative value, indicating a tax benefit or recovery of US$ 2,276 million. Subsequently, income taxes turned positive, registering amounts ranging from US$ 503 million to US$ 873 million from 2018 through 2021. The lowest recorded amount was US$ 517 million in 2020, followed by a noticeable increase to US$ 873 million in 2021. This pattern suggests the entity transitioned from a tax recovery position in 2017 to consistent tax expenses in subsequent years, with some fluctuations potentially influenced by operational or regulatory factors.

Cash Operating Taxes

Cash operating taxes showed a declining trend from US$ 784 million in 2017 to US$ 509 million in 2020. In 2018, the amount decreased slightly to US$ 753 million and further dropped to US$ 570 million in 2019. The 2020 figure marks the lowest during the period analyzed. However, in 2021, cash operating taxes increased sharply to US$ 827 million, reaching the highest level in the dataset. This increase may indicate higher taxable income, changes in tax legislation, or operational adjustments impacting taxable cash flows.

Overall, the data reveals a shift from a significant income tax benefit in 2017 to ongoing tax expenses in later years, alongside a generally declining trend in cash operating taxes until 2020, followed by a marked rise in 2021. These trends could reflect changes in profitability, tax strategy, or external fiscal conditions impacting the company's tax obligations.

The financial data indicates notable trends in debt, equity, and invested capital over the five-year period ending in 2021.

Total reported debt & leases

This item shows a consistent upward trend throughout the period. Debt increased steadily from $10,336 million in 2017 to $14,253 million in 2021. The increase appears continuous year over year, with the most significant growth occurring between 2020 and 2021.

Stockholders’ equity

Stockholders’ equity exhibits a declining pattern over the same timeframe. Equity decreased from $16,359 million in 2017 to $13,641 million in 2021. The decline is relatively gradual but consistent each year, reflecting potential shareholder value diminution or increased liabilities.

Invested capital

Invested capital shows a moderate increase from $33,382 million in 2017 to $35,469 million in 2021. However, the growth is not linear; the capital rose annually until 2020, after which it exhibits minimal change between 2020 and 2021. This trend suggests that investments or total capital expenditures slowed or stabilized towards the end of the period.

Overall, the capital structure reflects a rising reliance on debt financing accompanied by declining equity, while the total invested capital has grown modestly but appears to plateau in the most recent year. These movements could indicate a strategic shift towards leveraging debt and managing capital investment more conservatively.

The data reveals several noteworthy trends over the five-year period ending in 2021. The economic profit remains negative throughout the entire period, indicating persistent challenges in generating returns above the cost of capital. Although there is some fluctuation, the economic profit shows a general improvement pattern after a steep decline in 2020, recovering somewhat in 2021.

Invested capital exhibits a steady increase year over year, rising from approximately $33.4 billion in 2017 to about $35.5 billion in 2021. This suggests ongoing investment or capital deployment in assets, albeit at a diminishing growth pace in the final years.

The economic spread ratio, which measures the difference between the return on invested capital and the cost of capital, is negative for all years, indicating the company consistently earns less than its capital cost. However, the ratio shows a slight improving trend despite the significant dip in 2020. After worsening to nearly -7.73% in 2020, it recovers to -4.82% in 2021, suggesting some operational or financial improvements.

Economic Profit

Remained negative throughout the period, with a notable decline in 2020 followed by partial recovery in 2021.

Invested Capital

Demonstrated steady growth each year, increasing the asset base consistently over the five years.

Economic Spread Ratio

Consistently negative, indicating returns below the cost of capital, but with signs of improvement particularly in the final year.

Overall, the financial indicators suggest the company has faced challenges in creating value beyond its cost of capital, although the increasing invested capital shows confidence in continued operations or growth strategy. The improvement in economic profit and spread toward the end of the period may reflect successful initiatives or market conditions enhancing profitability.

The financial data reveals several notable trends over the five-year period ending December 31, 2021. Economic profit consistently remained negative throughout this timeframe, indicating ongoing challenges in generating returns above the cost of capital. Although the economic loss narrowed from -2,037 million USD in 2017 to -1,710 million USD in 2021, there was a significant deterioration in 2020, where economic profit dropped sharply to -2,739 million USD before improving the following year.

Railway operating revenues experienced fluctuations but demonstrated a general upward trend. Revenues increased from 10,551 million USD in 2017 to a peak of 11,458 million USD in 2018. After a slight decline in 2019, revenues fell more noticeably in 2020 to 9,789 million USD, likely influenced by external factors impacting demand or operations during that year. Revenues rebounded in 2021 to 11,142 million USD, approaching pre-pandemic levels.

The economic profit margin, which measures economic profit as a percentage of revenues, mirrored the trends in economic profit. The margin improved slightly from -19.31% in 2017 to -15.34% in 2021, suggesting some progress in profitability relative to revenue. However, the margin worsened markedly in 2020, collapsing to -27.98%, coinciding with the revenue drop and deeper economic losses. The recovery in 2021 improved the margin but it remained negative, indicating that the company operated below its economic cost despite increased revenues.

Summary of Key Trends:

- Persistent negative economic profit throughout the five years with signs of recovery post-2020.

- Railway operating revenues showed growth with a significant dip in 2020, followed by a partial recovery in 2021.

- Improved economic profit margin over the period despite remaining negative, with a sharp decline in 2020 reflecting operational challenges or external disruptions.