Stock Analysis on Net
Stock Analysis on Net

Norfolk Southern Corp. (NYSE:NSC)

DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin 

Microsoft Excel LibreOffice Calc

Decomposing ROE involves expressing net income divided by shareholders’ equity as the product of component ratios.

Two-Component Disaggregation of ROE

Norfolk Southern Corp., decomposition of ROE

Microsoft Excel LibreOffice Calc
ROE = ROA × Financial Leverage
Dec 31, 2021 22.03% = 7.81% × 2.82
Dec 31, 2020 13.61% = 5.30% × 2.57
Dec 31, 2019 17.93% = 7.18% × 2.50
Dec 31, 2018 17.35% = 7.36% × 2.36
Dec 31, 2017 33.03% = 15.13% × 2.18

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

The primary reason for the increase in return on equity ratio (ROE) over 2021 year is the increase in profitability measured by return on assets ratio (ROA).

Three-Component Disaggregation of ROE

Norfolk Southern Corp., decomposition of ROE

Microsoft Excel LibreOffice Calc
ROE = Net Profit Margin × Asset Turnover × Financial Leverage
Dec 31, 2021 22.03% = 26.97% × 0.29 × 2.82
Dec 31, 2020 13.61% = 20.56% × 0.26 × 2.57
Dec 31, 2019 17.93% = 24.10% × 0.30 × 2.50
Dec 31, 2018 17.35% = 23.27% × 0.32 × 2.36
Dec 31, 2017 33.03% = 51.22% × 0.30 × 2.18

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

The primary reason for the increase in return on equity ratio (ROE) over 2021 year is the increase in profitability measured by net profit margin ratio.

Five-Component Disaggregation of ROE

Norfolk Southern Corp., decomposition of ROE

Microsoft Excel LibreOffice Calc
ROE = Tax Burden × Interest Burden × EBIT Margin × Asset Turnover × Financial Leverage
Dec 31, 2021 22.03% = 0.77 × 0.86 × 40.60% × 0.29 × 2.82
Dec 31, 2020 13.61% = 0.80 × 0.80 × 32.23% × 0.26 × 2.57
Dec 31, 2019 17.93% = 0.78 × 0.85 × 36.25% × 0.30 × 2.50
Dec 31, 2018 17.35% = 0.77 × 0.86 × 35.14% × 0.32 × 2.36
Dec 31, 2017 33.03% = 1.73 × 0.85 × 34.86% × 0.30 × 2.18

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

The primary reason for the increase in return on equity ratio (ROE) over 2021 year is the increase in operating profitability measured by EBIT margin ratio.

Two-Component Disaggregation of ROA

Norfolk Southern Corp., decomposition of ROA

Microsoft Excel LibreOffice Calc
ROA = Net Profit Margin × Asset Turnover
Dec 31, 2021 7.81% = 26.97% × 0.29
Dec 31, 2020 5.30% = 20.56% × 0.26
Dec 31, 2019 7.18% = 24.10% × 0.30
Dec 31, 2018 7.36% = 23.27% × 0.32
Dec 31, 2017 15.13% = 51.22% × 0.30

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

The primary reason for the increase in return on assets ratio (ROA) over 2021 year is the increase in profitability measured by net profit margin ratio.

Four-Component Disaggregation of ROA

Norfolk Southern Corp., decomposition of ROA

Microsoft Excel LibreOffice Calc
ROA = Tax Burden × Interest Burden × EBIT Margin × Asset Turnover
Dec 31, 2021 7.81% = 0.77 × 0.86 × 40.60% × 0.29
Dec 31, 2020 5.30% = 0.80 × 0.80 × 32.23% × 0.26
Dec 31, 2019 7.18% = 0.78 × 0.85 × 36.25% × 0.30
Dec 31, 2018 7.36% = 0.77 × 0.86 × 35.14% × 0.32
Dec 31, 2017 15.13% = 1.73 × 0.85 × 34.86% × 0.30

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

The primary reason for the increase in return on assets ratio (ROA) over 2021 year is the increase in operating profitability measured by EBIT margin ratio.

Disaggregation of Net Profit Margin

Norfolk Southern Corp., decomposition of net profit margin ratio

Microsoft Excel LibreOffice Calc
Net Profit Margin = Tax Burden × Interest Burden × EBIT Margin
Dec 31, 2021 26.97% = 0.77 × 0.86 × 40.60%
Dec 31, 2020 20.56% = 0.80 × 0.80 × 32.23%
Dec 31, 2019 24.10% = 0.78 × 0.85 × 36.25%
Dec 31, 2018 23.27% = 0.77 × 0.86 × 35.14%
Dec 31, 2017 51.22% = 1.73 × 0.85 × 34.86%

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

The primary reason for the increase in net profit margin ratio over 2021 year is the increase in operating profitability measured by EBIT margin ratio.