Norfolk Southern Corp. (NYSE:NSC)

Total Asset Turnover

The reported total asset turnover shows a slight fluctuation over the five-year period, starting at 0.30 in 2017, increasing marginally to 0.32 in 2018, then declining to 0.26 in 2020 before recovering to 0.29 in 2021. The adjusted figures follow a very similar trajectory, indicating relatively stable asset utilization efficiency with minor variations.

Current Ratio

The reported current ratio exhibits variability, initially declining from 0.84 in 2017 to 0.72 in 2018, then improving to a peak of 1.07 in 2020 before falling again to 0.86 in 2021. The adjusted current ratio mirrors this pattern closely. These values overall suggest fluctuations in short-term liquidity, with the ratio exceeding 1.0 only in 2020, indicating a temporary strengthening of liquidity that was not sustained.

Debt to Equity Ratio

The reported debt to equity ratio demonstrates a clear upward trend, rising steadily from 0.60 in 2017 to 1.01 in 2021, indicating increasing reliance on debt financing relative to shareholders' equity. The adjusted ratio shows a similar rising pattern but at lower absolute levels, moving from 0.46 to 0.68, confirming greater leverage but moderated when adjustments are applied.

Debt to Capital Ratio

This ratio also increases over the period, with the reported debt to capital rising from 0.38 in 2017 to 0.50 in 2021. The adjusted figures reflect the same trend, increasing from 0.31 to 0.41. This indicates that debt forms an increasing portion of the company’s capital structure annually.

Financial Leverage

The reported financial leverage ratio shows a consistent incremental increase, starting at 2.18 in 2017 and reaching 2.82 in 2021. Adjusted financial leverage grows from 1.60 to 1.85 over the same period. This steady rise suggests a growing degree of financial leverage, implying greater use of debt to finance assets.

Net Profit Margin

The reported net profit margin displays considerable variability. It begins very high at 51.22% in 2017, experiences a sharp decline in 2018 to around 23.27%, remains relatively stable thereafter with minor fluctuations but improves to 26.97% in 2021. Adjusted net profit margin figures reflect a more stable and lower profile, starting at 25.39% and generally rising to 30.36% by 2021, indicating profitability is strong but was influenced by extraordinary items in 2017.

Return on Equity (ROE)

The reported ROE experiences a downward trend from 33.03% in 2017 to a lower point of 13.61% in 2020 before improving to 22.03% in 2021. Adjusted ROE follows a similar pattern but at reduced levels, declining initially and then recovering partially, ending at 16.25% in 2021. This indicates a decrease in the company’s efficiency in generating returns on shareholders’ equity over the period with some improvement in the latest year.

Return on Assets (ROA)

The reported ROA declines significantly from 15.13% in 2017 to 5.30% in 2020, then slightly recovers to 7.81% in 2021. Adjusted ROA remains relatively stable between 7.40% and 8.79%, with a dip in 2020. The fall in reported ROA suggests decreased asset profitability before partial recovery, while the adjusted figures imply relatively consistent asset returns excluding extraordinary effects.

The financial data reveals several noteworthy trends over the five-year period ending December 31, 2021. Railway operating revenues experienced some fluctuations, with a general upward trend from 2017 through 2019, peaking at 11,458 million US dollars in 2018 before slightly declining in 2019 and more noticeably dropping in 2020. A recovery is evident in 2021, reaching 11,142 million US dollars, nearly equalling the 2018 level.

Total assets displayed a steady increase over the reviewed period, from 35,711 million US dollars in 2017 to 38,493 million US dollars in 2021. This upward trajectory indicates consistent growth in the company's asset base. Adjusted total assets followed a similar pattern, rising from 36,218 million US dollars in 2017 to 38,501 million US dollars in 2021, closely aligning with the reported total assets.

The reported total asset turnover ratio, which measures how efficiently assets generate revenue, showed minor variability, starting at 0.3 in 2017, peaking at 0.32 in 2018, then declining to a low of 0.26 in 2020, before recovering slightly to 0.29 in 2021. This pattern mirrors the fluctuation in revenues, with efficiency declining during the year with lower revenues and rebounding subsequently.

Similarly, the adjusted total asset turnover ratio exhibited comparable trends, moving from 0.29 in 2017 up to 0.31 in 2018, decreasing to 0.26 in 2020, and rising back to 0.29 in 2021. The consistency between reported and adjusted ratios suggests reliability in the asset utilization measures.

Overall, the data suggests that despite a temporary setback in 2020, likely due to external factors impacting revenues, the company maintained steady asset growth and returned to previous operational efficiency levels by 2021. The recovery in asset turnover ratios alongside revenues points to resiliency in asset management and revenue generation capabilities.

The financial data reveals fluctuations in the liquidity position over the analyzed periods. Current assets exhibited a general decline from 2017 to 2018, decreasing from $2,149 million to $1,862 million, followed by a recovery phase reaching $2,318 million by 2020. However, in 2021, current assets decreased again to $2,167 million, failing to reach the peak observed in 2020.

Current liabilities showed a somewhat contrasting pattern. After increasing from $2,545 million in 2017 to $2,591 million in 2018, liabilities decreased notably to $2,160 million in 2020 before rising sharply again to $2,521 million in 2021. This rise in liabilities in the last reported year nearly offset the gains from the decreased liabilities in 2020.

The reported current ratio correlates with the movements in current assets and liabilities, indicating overall liquidity trends. The ratio declined from 0.84 in 2017 to 0.72 in 2018, signifying a deteriorating liquidity position. A marked improvement occurred in 2019 and 2020, with the ratio reaching a peak of 1.07 in 2020, suggesting an improvement in short-term financial health. However, the ratio fell back to 0.86 in 2021, implying a slight weakening of liquidity compared to 2020 but still better than the initial years.

Adjusted current assets and adjusted current ratio follow similar trends to their reported counterparts, confirming consistency in the liquidity adjustments applied. The adjusted current assets mirrored the movements of reported current assets, showing declines and recoveries within the period. Correspondingly, the adjusted current ratio moved from 0.85 in 2017 down to 0.72 in 2018, then up to 1.08 in 2020, before declining again to 0.86 in 2021.

Overall, the data reflects a period of liquidity stress in 2018, followed by a strengthening phase culminating in 2020, after which there was a partial reversal in 2021. The fluctuations in liabilities play a significant role in this trend, with the company's short-term financial stability closely tied to the management of current liabilities and assets.

Total debt

The total debt increased consistently from US$9,836 million at the end of 2017 to US$13,840 million by the end of 2021. This steady upward trend indicates a growing leverage position over the five-year period.

Stockholders’ equity

Stockholders’ equity showed a declining trend throughout the period, decreasing from US$16,359 million in 2017 to US$13,641 million in 2021. This reduction suggests a decrease in the net asset base or accumulated retained earnings during the timeframe.

Reported debt to equity ratio

The reported debt to equity ratio rose from 0.60 in 2017 to 1.01 in 2021, reflecting an increase in reported leverage. This indicates the company took on more debt relative to its equity, crossing the threshold of 1.0 by the end of 2021, which may signify higher financial risk.

Adjusted total debt

The adjusted total debt followed a similar pattern to the reported total debt, with figures increasing from US$10,336 million in 2017 to US$14,253 million in 2021. The adjusted figures are consistently higher than the reported ones, implying certain liabilities or obligations were factored in adjustments.

Adjusted stockholders’ equity

Adjusted stockholders’ equity declined from US$22,690 million in 2017 to US$20,814 million in 2021, mirroring the downward trend seen in reported equity but remaining at higher absolute values due to adjustments.

Adjusted debt to equity ratio

The adjusted debt to equity ratio rose from 0.46 in 2017 to 0.68 in 2021, indicating an increase in leverage when considering adjusted figures. Although the adjusted ratio remains below 1.0, the upward movement reflects a gradual rise in financial leverage over the five-year span.

The analysis of the financial data over the five-year period reveals a consistent increase in the company's debt levels, both in terms of total and adjusted debt. Total debt has risen steadily each year, from US$9,836 million at the end of 2017 to US$13,840 million by the end of 2021. Similarly, adjusted total debt has also increased annually, moving from US$10,336 million to US$14,253 million over the same timeframe.

Total capital has shown a relatively modest increase throughout the period, starting at US$26,195 million in 2017 and reaching around US$27,481 million in 2021. Adjusted total capital follows a similar pattern, rising gradually from US$33,026 million in 2017 to US$35,067 million in 2021. This trend indicates that while the company’s capital base has grown slightly, the growth pace is slower compared to debt.

Debt to Capital Ratios

The reported debt to capital ratio shows an increasing trend from 0.38 in 2017 to 0.50 in 2021, reflecting a rising proportion of debt in the company’s capital structure. The adjusted debt to capital ratio also mirrors this trend, increasing from 0.31 to 0.41 over the five-year period. This suggests that, when considering adjustments, debt still represents a growing share of the company’s capital.

Implications

These trends point toward a progressively higher leverage position. The consistent rise in both total and adjusted debt levels, combined with only marginal increases in capital, results in higher debt-to-capital ratios. This may imply greater financial risk due to increased reliance on debt financing. Monitoring this leverage growth is important for assessing the company’s financial stability and its ability to service debt obligations in the future.

The financial data over the five-year period reveals multiple notable trends in the company's balance sheet structure and leverage ratios.

Total Assets

Total assets showed a moderate but consistent increase, rising from US$35,711 million at the end of 2017 to US$38,493 million by the end of 2021. This steady growth suggests ongoing asset accumulation or appreciation over the period.

Stockholders’ Equity

Reported stockholders’ equity exhibited a declining trend, decreasing from US$16,359 million in 2017 to US$13,641 million in 2021. This decline indicates either net losses, dividend payouts exceeding net income, share repurchases, or other equity-reducing activities during these years.

Reported Financial Leverage

The reported financial leverage ratio increased progressively from 2.18 in 2017 to 2.82 in 2021. This rise in leverage points to an increasing reliance on debt financing relative to equity, potentially reflecting higher financial risk or strategic capital structure adjustments.

Adjusted Total Assets

Adjusted total assets closely mirror the trend observed in total assets, showing steady growth from US$36,218 million in 2017 to US$38,501 million in 2021. The slightly higher adjusted figures compared to reported assets may indicate asset revaluation or adjustments for accounting purposes.

Adjusted Stockholders’ Equity

Adjusted stockholders’ equity decreased from US$22,690 million in 2017 to US$20,814 million in 2021, reflecting a downward trend albeit less pronounced compared to reported equity. This suggests the adjustments moderate the decline but do not fully offset it.

Adjusted Financial Leverage

The adjusted financial leverage ratio increased from 1.60 in 2017 to 1.85 in 2021, indicating a rising proportion of debt relative to the adjusted equity base. Although lower than the reported leverage ratios, the upward trend still points to increasing leverage and potentially greater financial risk over time.

Overall, the data indicates the company has increased its asset base steadily while stockholders’ equity has contracted, leading to higher leverage ratios whether reported or adjusted. This pattern reflects growing financial leverage and potentially increased financial risk. The adjustments applied to both assets and equity slightly temper the equity decline and leverage increase but confirm the underlying trends observed in the reported figures.

The financial data reveals several notable trends over the five-year period ending December 31, 2021.

Net Income

There is a significant fluctuation in net income during the period. The value started high at 5,404 million US dollars in 2017, then sharply decreased in 2018 to 2,666 million. This was followed by a slight increase in 2019 to 2,722 million. A decline occurred again in 2020 to 2,013 million, before rebounding to 3,005 million in 2021. Overall, net income experienced volatility with a downward trend from 2017 to 2020 and a partial recovery in 2021.

Railway Operating Revenues

Operating revenues show a less volatile but still varying pattern. Revenues increased from 10,551 million US dollars in 2017 to a peak of 11,458 million in 2018. After a slight reduction to 11,296 million in 2019, revenues dropped more substantially to 9,789 million in 2020, likely impacted by external factors affecting the industry. Revenues then recovered to 11,142 million by the end of 2021, close to pre-2020 levels.

Reported Net Profit Margin

The reported net profit margin exhibits a declining trend from 2017 through 2020, starting at 51.22% and falling to 20.56%. The margin then increased again to 26.97% in 2021. This pattern corresponds to the volatility seen in the net income figures and suggests variations in cost control or pricing power over the years.

Adjusted Net Income

Adjusted net income presents a more stable trend compared to reported net income. It increased gradually from 2,679 million in 2017 to a peak of 3,126 million in 2019, then fell sharply to 2,049 million in 2020. The adjusted measure then rose significantly to 3,383 million in 2021, surpassing all prior years. This upward movement in 2021 may indicate improved operational efficiencies or favorable adjustments.

Adjusted Net Profit Margin

Similar to the adjusted net income, the adjusted net profit margin remained relatively stable with some growth trends. It started at 25.39% in 2017, experienced a slight dip in 2018 to 23.74%, then increased to 27.67% in 2019. There was a decline to 20.93% in 2020, followed by a significant recovery to 30.36% in 2021. This suggests the company managed to enhance profitability on an adjusted basis, especially in the most recent year.

In summary, the data illustrates a period marked by income and revenue volatility, with 2020 as a trough likely influenced by external challenges. Both reported and adjusted profitability margins show a similar pattern of decline until 2020, followed by a substantive recovery in 2021. The adjusted figures provide a smoother perspective on earnings, revealing an underlying improvement in profitability and operational performance particularly notable in the latest year.

Net Income

Net income showed a significant decline from 2017 to 2018, dropping from $5404 million to $2666 million. It remained relatively stable in 2019 at $2722 million, followed by a further decrease in 2020 to $2013 million. In 2021, net income increased to $3005 million, indicating partial recovery but remaining below the 2017 level.

Stockholders’ Equity

Stockholders’ equity exhibited a consistent downward trend over the five-year period. It decreased steadily from $16,359 million in 2017 to $13,641 million by the end of 2021, reflecting a reduction in owners’ residual interest in the company over time.

Reported Return on Equity (ROE)

The reported ROE mirrored the movements in net income and equity. It declined sharply from 33.03% in 2017 to 17.35% in 2018, then remained relatively stable through 2019 at 17.93%. This was followed by a drop to 13.61% in 2020 before recovering to 22.03% in 2021. Despite the rebound, the ROE in 2021 was still notably lower than the peak in 2017.

Adjusted Net Income

Adjusted net income demonstrated more stability compared to the reported net income. It increased slightly from $2679 million in 2017 to $2720 million in 2018, then continued to rise to $3126 million in 2019. In 2020, it decreased to $2049 million, but rebounded strongly to $3383 million in 2021, exceeding prior years’ levels.

Adjusted Stockholders’ Equity

Adjusted stockholders’ equity showed a mild downward trend but was generally more stable than the reported equity. It decreased from $22,690 million in 2017 to $20,814 million in 2021, with minor fluctuations along the period.

Adjusted Return on Equity (ROE)

The adjusted ROE followed a similar pattern to adjusted net income and adjusted equity. It increased from 11.81% in 2017 to 14.2% in 2019, then decreased substantially to 9.43% in 2020. A strong recovery occurred in 2021, with the adjusted ROE rising to 16.25%, approaching the higher performance levels observed earlier in the period.

Summary of Trends

Overall, both reported and adjusted performance metrics show fluctuations over the five years, with notable deterioration around 2018 to 2020, followed by a recovery in 2021. Declining stockholders’ equity suggests potential capital reduction or increased distributions. The divergence between reported and adjusted figures highlights the impact of accounting adjustments on the evaluation of profitability and capital efficiency. The rebound in 2021 indicates a positive turnaround but performance remains below the initial peak levels of 2017 in several key metrics.

The financial data reveals significant fluctuations in net income for the analyzed periods. Net income saw a substantial decrease from 5,404 million USD at the end of 2017 to 2,666 million USD in 2018. Subsequently, it remained relatively stable in 2019 at 2,722 million USD before declining again to 2,013 million USD in 2020. There was a notable recovery in 2021 with net income rising to 3,005 million USD.

Total assets exhibited a steady growth trend over the period. Assets increased incrementally from 35,711 million USD in 2017 to 38,493 million USD by the end of 2021, reflecting consistent asset base expansion.

The reported Return on Assets (ROA) mirrored the variations in net income, showing a marked decline from 15.13% in 2017 to 7.36% in 2018 and further to 7.18% in 2019. The downward trend continued into 2020 with ROA falling to 5.3%, followed by an improvement to 7.81% in 2021. This pattern indicates reduced profitability relative to assets during 2018-2020, with partial recovery afterwards.

Adjusted net income figures followed a similar trajectory to reported net income but with less volatility. Adjusted net income slightly increased from 2,679 million USD in 2017 to 2,720 million USD in 2018 and further to 3,126 million USD in 2019. It declined sharply to 2,049 million USD in 2020 before rising to 3,383 million USD in 2021, suggesting adjustments smooth out some of the fluctuations seen in reported results.

The adjusted total assets also trended upwards consistently from 36,218 million USD in 2017 to 38,501 million USD in 2021, paralleling the reported total assets trend but with marginally higher values each year.

Adjusted ROA demonstrated relatively stable returns in 2017 and 2018 at approximately 7.4%, followed by an increase to 8.24% in 2019. Similar to reported ROA, it decreased to 5.4% in 2020 and recovered to 8.79% in 2021. This indicates profitability adjusted for certain items was more resilient and showed better recovery in the final year under review.

Overall, the data presents a period of volatility in profitability, with pronounced declines in both net income and ROA during 2018-2020, possibly influenced by external factors. Asset growth was steady throughout the period. Adjusted figures suggest less pronounced fluctuations and a more consistent underlying performance trend. The improvement in 2021 metrics could imply early signs of recovery or enhanced operational efficiency following the preceding challenging years.