Is Norfolk Southern Stock Underperforming the S&P 500?

Valued at $54.1 billion by market cap, Atlanta, Georgia-based Norfolk Southern Corporation (NSC) engages in the rail transportation of raw materials, intermediate products, and finished goods in the United States. The company also transports agriculture, forest, and consumer products, and overseas freight through various Atlantic and Gulf Coast ports.

Companies valued at $10 billion or more are generally classified as “large-cap stocks,” NSC fits this criterion perfectly. As a key player in the railroad industry, NSC provides comprehensive logistics services and offers the most extensive intermodal network on the eastern side of the United States.

However, the transportation giant's stock has fallen 13.9% from its two-year high of $277.60, recorded on Nov. 6, 2024. Shares of Norfolk have declined 6.6% over the past three months, performing slightly better than the S&P 500 Index’s ($SPX) 7.7% drop during the same period.

However, over the longer term, NSC has underperformed compared to SPX. Norfolk stock declined 7.1% over the past six months and 7.9% over the past 52 weeks, significantly falling behind SPX’s 1.1% gains over the past six months and 9.7% returns over the past 52 weeks.

To confirm the recent downturn, Norfolk stock has been trading along its downward trending 50-day moving average in recent months and has fallen below its 200-day moving average in the current months.

Norfolk stock prices gained nearly 1.8% after the release of its solid Q4 results on Jan. 29. The company reported total railway operating revenues of more than $3 billion and income from railway operations of $1.1 billion. Meanwhile, Norfolk’s net income jumped 39.1% compared to the year-ago quarter to $733 million. Moreover, its adjusted EPS came in at $3.04, surpassing the Wall Street EPS estimates by 3.1%.

However, the company has lagged behind its peer, Union Pacific Corporation's (UNP) decline of 1.7% over the past six months and 1.1% over the past 52 weeks.

Analysts remain moderately bullish on Norfolk’s prospects. NSC stock has a consensus “Moderate Buy” rating among the 26 analysts covering it. NSC’s mean price target of $277.26 implies a 16% potential upside from the current market prices.