Price to FCFE (P/FCFE)
Free Cash Flow to Equity (FCFE)
Norfolk Southern Corp., FCFE calculation
US$ in millions
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 financial performance from 2017 to 2021 reveals a consistent upward trajectory in cash generation, characterized by a significant expansion in equity-available cash flows.
- Net Cash Provided by Operating Activities
- A steady growth pattern is observed in operating cash flows, which increased from 3,253 million USD in 2017 to 4,255 million USD by 2021. While a marginal contraction occurred in 2020, where values decreased to 3,637 million USD, the subsequent recovery in 2021 represents the highest operating cash flow within the analyzed period.
- Free Cash Flow to Equity (FCFE) Trends
- FCFE experienced a substantial surge between 2017 and 2018, rising from 1,320 million USD to 3,252 million USD. This value remained relatively stable through 2019 before seeing a temporary decline to 2,879 million USD in 2020. A robust recovery followed in 2021, with FCFE reaching a period peak of 4,036 million USD.
- Correlation between Operating Cash and FCFE
- The gap between net cash provided by operating activities and FCFE narrowed considerably after 2017. In the initial year, FCFE represented approximately 40% of operating cash flow, suggesting significant capital expenditures or debt servicing. By 2021, this relationship shifted, with FCFE constituting approximately 95% of operating cash flow, indicating a high conversion rate of operating cash into equity-available funds.
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Price to FCFE Ratio, Current
Norfolk Southern Corp., current P/FCFE calculation, comparison to benchmarks
| No. shares of common stock outstanding | 238,332,514 |
| Selected Financial Data (US$) | |
| Free cash flow to equity (FCFE) (in millions) | 4,036) |
| FCFE per share | 16.93 |
| Current share price (P) | 262.53 |
| Valuation Ratio | |
| P/FCFE | 15.50 |
| Benchmarks | |
| P/FCFE, Competitors1 | |
| FedEx Corp. | 7.59 |
| Uber Technologies Inc. | 13.76 |
| Union Pacific Corp. | 27.26 |
| United Airlines Holdings Inc. | — |
| United Parcel Service Inc. | 11.75 |
| P/FCFE, Sector | |
| Transportation | 19.34 |
Based on: 10-K (reporting date: 2021-12-31).
1 Click competitor name to see calculations.
If the company P/FCFE is lower then the P/FCFE of benchmark then company is relatively undervalued.
Otherwise, if the company P/FCFE is higher then the P/FCFE of benchmark then company is relatively overvalued.
Price to FCFE Ratio, Historical
Norfolk Southern Corp., historical P/FCFE calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 239,777,444 | 251,911,634 | 257,844,180 | 267,455,326 | 283,997,242 | |
| Selected Financial Data (US$) | ||||||
| Free cash flow to equity (FCFE) (in millions)2 | 4,036) | 2,879) | 3,254) | 3,252) | 1,320) | |
| FCFE per share3 | 16.83 | 11.43 | 12.62 | 12.16 | 4.65 | |
| Share price1, 4 | 270.42 | 245.57 | 212.68 | 171.46 | 138.61 | |
| Valuation Ratio | ||||||
| P/FCFE5 | 16.07 | 21.49 | 16.85 | 14.10 | 29.82 | |
| Benchmarks | ||||||
| P/FCFE, Competitors6 | ||||||
| FedEx Corp. | 36.75 | — | — | — | — | |
| Uber Technologies Inc. | 139.66 | — | — | — | — | |
| Union Pacific Corp. | 17.16 | — | — | — | — | |
| United Airlines Holdings Inc. | 2.58 | — | — | — | — | |
| United Parcel Service Inc. | 22.62 | — | — | — | — | |
| P/FCFE, Sector | ||||||
| Transportation | 19.46 | — | — | — | — | |
| P/FCFE, Industry | ||||||
| Industrials | — | — | — | — | — | |
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).
1 Data adjusted for splits and stock dividends.
3 2021 Calculation
FCFE per share = FCFE ÷ No. shares of common stock outstanding
= 4,036,000,000 ÷ 239,777,444 = 16.83
4 Closing price as at the filing date of Norfolk Southern Corp. Annual Report.
5 2021 Calculation
P/FCFE = Share price ÷ FCFE per share
= 270.42 ÷ 16.83 = 16.07
6 Click competitor name to see calculations.
Between 2017 and 2021, the share price demonstrated a consistent and significant upward trajectory, increasing from 138.61 USD to 270.42 USD. Simultaneously, Free Cash Flow to Equity (FCFE) per share grew substantially over the five-year period, rising from 4.65 USD in 2017 to a peak of 16.83 USD in 2021, despite a marginal contraction observed in 2020.
- P/FCFE Ratio Volatility
- The P/FCFE ratio experienced a sharp contraction from 29.82 in 2017 to 14.10 in 2018. Following this initial decline, the ratio fluctuated, rising to 21.49 in 2020 before moderating to 16.07 by the end of 2021.
- Valuation and Cash Flow Correlation
- The divergence between the steady increase in share price and the fluctuating P/FCFE ratio indicates that the market valuation was heavily influenced by the rapid expansion of FCFE per share. Specifically, the significant jump in FCFE per share between 2017 and 2018 acted as a primary driver in compressing the valuation multiple, despite the rising share price.
- Recent Valuation Trend
- By 2021, the P/FCFE ratio of 16.07 suggests a more stabilized valuation compared to the 2017 peak, reflecting a stronger alignment between the company's market price and its actual capacity to generate cash flow for equity holders.
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