Norfolk Southern Corp. (NYSE:NSC)

The financial data reveals several notable trends in the company's profitability and efficiency ratios over the five-year period ending December 31, 2021.

Gross Profit Margin

The gross profit margin remained relatively stable, fluctuating slightly between 75.41% and 78.64%. After a decrease from 78.64% in 2017 to 75.41% in 2018, margins improved slightly in subsequent years, reaching 77.34% in 2021. This indicates consistent control over direct costs relative to revenue.

Operating Profit Margin

This margin demonstrated variability, initially increasing from 33.99% in 2017 to a peak of 35.31% in 2019. However, it declined to 30.67% in 2020, likely reflecting operational challenges, before rebounding sharply to 39.91% in 2021. The strong recovery in 2021 suggests improved operational efficiency or cost management.

Net Profit Margin

Net profit margin experienced a significant decline from 51.22% in 2017 to 20.56% in 2020, indicating reduced overall profitability during this period. A moderate recovery occurred in 2021, rising to 26.97%, but margins remained considerably lower than the initial year, suggesting ongoing pressures on net earnings or increased non-operating expenses.

Return on Equity (ROE)

ROE presented a declining trend from 33.03% in 2017 to 13.61% in 2020, reflecting diminished returns generated on shareholders’ equity. An increase to 22.03% in 2021 indicates a partial recovery, possibly connected to improved net profit margins and operational results.

Return on Assets (ROA)

ROA also declined from 15.13% in 2017 to a low of 5.3% in 2020, thereby showing reduced efficiency in asset utilization. The rise to 7.81% in 2021 points to a moderate improvement, but asset productivity remains below the starting levels.

Overall, the analysis shows that while gross profit margins remained stable, profitability and returns experienced a downward trend through 2020, likely influenced by external or operational pressures. The year 2021 showed a notable recovery across most profitability measures, indicating an improvement in company performance and operational efficiency.

Gross Profit

The gross profit figures demonstrate a generally stable trend over the five-year period with some fluctuations. It increased slightly from 8,297 million USD in 2017 to 8,641 million USD in 2018, then experienced a minor decline to 8,618 million USD in 2019. A more noticeable decrease occurred in 2020, dropping to 7,567 million USD, followed by a rebound to 8,617 million USD in 2021. This pattern suggests a temporary impact, possibly linked to external market or operational conditions in 2020.

Railway Operating Revenues

Revenues showed growth from 10,551 million USD in 2017 to 11,458 million USD in 2018, followed by a slight decrease to 11,296 million USD in 2019. A significant decline took place in 2020, dropping to 9,789 million USD. This was partially reversed in 2021 when revenues rose again to 11,142 million USD. The trend parallels changes in gross profit, indicating that revenue fluctuations are a key driver of gross profit variations.

Gross Profit Margin

The gross profit margin percentage remained relatively consistent throughout the period, within a narrow range from approximately 75.41% to 78.64%. After peaking at 78.64% in 2017, it dipped in 2018 to 75.41% and then recovered slightly in subsequent years, reaching approximately 77.34% by 2021. The stability of the margin suggests controlled cost management relative to revenues despite year-to-year revenue fluctuations.

Income from Railway Operations

The income from railway operations showed an overall increasing trend from 2017 to 2021. Starting at $3,586 million in 2017, it rose steadily to $3,959 million in 2018 and $3,989 million in 2019. There was a decline in 2020 to $3,002 million, likely reflecting external or industry-specific challenges during that period. However, in 2021 income significantly rebounded to $4,447 million, exceeding previous years' levels.

Railway Operating Revenues

Railway operating revenues followed a somewhat fluctuating pattern over the five-year period. Revenues increased from $10,551 million in 2017 to a peak of $11,458 million in 2018. There was a slight decline to $11,296 million in 2019, followed by a more pronounced decrease to $9,789 million in 2020, mirroring the drop in income. In 2021 the revenues partially recovered to $11,142 million, close to pre-2020 levels but still below the 2018 peak.

Operating Profit Margin

The operating profit margin demonstrated variability but generally positive momentum. It increased marginally from 33.99% in 2017 to 34.55% in 2018 and further to 35.31% in 2019, indicating improving operational efficiency. In 2020, the margin declined significantly to 30.67%, which corresponds to the year’s lower income and revenues, suggesting margin pressures. However, by 2021 the margin climbed sharply to 39.91%, marking the highest margin in the period and reflecting improved profitability.

Net Income

Net income exhibited a notable decline from 2017 to 2018, dropping from 5404 million US dollars to 2666 million US dollars. This reduced level persisted through 2019 and 2020, with only a slight recovery observed in 2021, reaching 3005 million US dollars. Overall, the trend indicates volatility and a substantial reduction from the peak in 2017.

Railway Operating Revenues

Railway operating revenues generally increased from 2017 to 2018, rising from 10551 million US dollars to 11458 million US dollars. However, a slight decrease occurred in 2019 to 11296 million US dollars, followed by a more significant decline in 2020, falling to 9789 million US dollars. Revenues partially rebounded in 2021 to 11142 million US dollars, yet did not reach the peak level seen in 2018. This pattern suggests some vulnerability, possibly related to external factors affecting operations in 2020.

Net Profit Margin

The net profit margin demonstrated a sharp decline from 51.22% in 2017 to 23.27% in 2018. It then showed marginal improvement in 2019 at 24.1%, but dropped again in 2020 to 20.56%. In 2021, the margin improved to 26.97%, indicating some recovery but remaining well below the 2017 level. This pattern aligns with the fluctuations in net income and revenues, reflecting challenges in maintaining profitability over the period.

Overall Insights

The data reveal a strong peak in financial performance in 2017, followed by a significant downturn in subsequent years. Both net income and operating revenues declined notably during 2018 and 2020, with a partial recovery in 2021. The net profit margin trend mirrors this volatility, suggesting operational or market pressures impacted profitability. The partial rebound in 2021 is indicative of improving conditions but the figures have not returned to pre-2018 levels, implying continued caution for future periods.

The financial data indicates several key trends in the company's performance from 2017 to 2021.

Net Income

Net income shows a notable decline from $5,404 million in 2017 to $2,666 million in 2018, followed by a slight recovery to $2,722 million in 2019. In 2020, net income decreased further to $2,013 million, before increasing again to $3,005 million in 2021. Overall, net income exhibits volatility with a downward trend from 2017 to 2020, and some recovery in the final year.

Stockholders’ Equity

Stockholders’ equity reveals a steady decline over the period analyzed, dropping from $16,359 million in 2017 to $13,641 million in 2021. This continuous decrease suggests reductions in retained earnings, dividend payouts exceeding earnings, share repurchases, or other factors impacting equity negatively.

Return on Equity (ROE)

ROE mirrors the pattern observed in net income, starting at a robust 33.03% in 2017, declining sharply to 17.35% in 2018, and stabilizing slightly around 17.93% in 2019. A further decline to 13.61% occurs in 2020, followed by an improvement to 22.03% in 2021. This fluctuation indicates varying levels of profitability in relation to shareholders’ equity, with the highest efficiency in generating returns occurring at the beginning of the period.

In summary, the company experienced a strong financial position in 2017 that weakened substantially in subsequent years, with decreases in net income and equity and a corresponding drop in return on equity. The year 2021 shows partial recovery in profitability metrics, suggesting potential improvement in operational or financial efficiency during that period.

Net Income

Net income exhibited notable fluctuation over the five-year period. The highest value was recorded in 2017 at 5,404 million US dollars. This figure sharply decreased in 2018 to 2,666 million and remained relatively stable in 2019 at 2,722 million. In 2020, net income further declined to 2,013 million but saw a partial recovery in 2021 to 3,005 million. The overall trend indicates a significant drop after 2017 with gradual signs of improvement from 2020 onwards.

Total Assets

Total assets showed a consistent, albeit modest, increase each year. The asset base grew from 35,711 million US dollars in 2017 to 38,493 million in 2021. The increases were steady and gradual, reflecting a stable expansion of the asset base despite fluctuations in net income.

Return on Assets (ROA)

The ROA followed a downward trend after 2017, starting at 15.13% and falling significantly to 7.36% in 2018. It remained relatively stable but lower in 2019 at 7.18% and further decreased to its lowest point of 5.3% in 2020. In 2021, ROA showed improvement, rising to 7.81%, aligning with the partial recovery observed in net income. The decline in ROA over the period suggests diminishing efficiency in utilizing assets to generate profit, with some recovery in the final year.