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Norfolk Southern (NSC) Up 12.3% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Norfolk Southern (NSC - Free Report) . Shares have added about 12.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Norfolk Southern due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Earnings Beat at Norfolk Southern in Q3
Quarterly earnings of $4.10 per share surpassed the Zacks Consensus Estimate of $3.64. Moreover, the bottom line improved 34% year over year.
Railway operating revenues in the quarter under review came in at $3,343 million, outperforming the Zacks Consensus Estimate of $3,219.6 million. The top line increased 17.22% year over year, with all key segments, including merchandise, intermodal and coal registering improvement in revenues. Revenue per unit rose 20% year over year, driven by higher fuel surcharges and pricing. Total volumes declined 2% year over year due to network challenges.
Income from railway operations climbed 12% year over year to $1,271 million. Railway operating expenses shot up 21% on a year-over-year basis to $2,071 million, primarily due to higher fuel expenses and purchased services. Norfolk Southern’s operating ratio (operating expenses as a percentage of revenues) deteriorated to 62% in the third quarter from 60.2% in the year-ago quarter due to higher costs.
In the first nine months of 2022, NSC rewarded its shareholders with $3,165 million through dividends ($881 million) and share repurchases ($2,284 million). Segmental Performance
Merchandise revenues climbed 13% year over year to $1,930 million. Volumes declined 2% while revenue per unit ascended 15% year over year.
Intermodal revenues augmented 16% year over year to $942 million. While segmental volumes decreased 5%, revenue per unit ascended 22%.
Coal revenues totaled $471 million, up 43% year over year. Coal volumes increased 14%. Revenue per unit jumped 25% in the reported quarter.
Liquidity
Norfolk Southern exited the third quarter with cash and cash equivalents of $1,214 million compared with $1,571 million at the end of March 2022. Norfolk Southern had a long-term debt of $14,463 million at the end of the September quarter compared with $13,691 million at March 2022 end.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
At this time, Norfolk Southern has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Norfolk Southern has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Norfolk Southern belongs to the Zacks Transportation - Rail industry. Another stock from the same industry, Union Pacific (UNP - Free Report) , has gained 8.4% over the past month. More than a month has passed since the company reported results for the quarter ended September 2022.
Union Pacific reported revenues of $6.57 billion in the last reported quarter, representing a year-over-year change of +18%. EPS of $3.19 for the same period compares with $2.57 a year ago.
For the current quarter, Union Pacific is expected to post earnings of $2.85 per share, indicating a change of +7.1% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Union Pacific. Also, the stock has a VGM Score of C.
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Norfolk Southern (NSC) Up 12.3% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Norfolk Southern (NSC - Free Report) . Shares have added about 12.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Norfolk Southern due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Earnings Beat at Norfolk Southern in Q3
Quarterly earnings of $4.10 per share surpassed the Zacks Consensus Estimate of $3.64. Moreover, the bottom line improved 34% year over year.
Railway operating revenues in the quarter under review came in at $3,343 million, outperforming the Zacks Consensus Estimate of $3,219.6 million. The top line increased 17.22% year over year, with all key segments, including merchandise, intermodal and coal registering improvement in revenues. Revenue per unit rose 20% year over year, driven by higher fuel surcharges and pricing. Total volumes declined 2% year over year due to network challenges.
Income from railway operations climbed 12% year over year to $1,271 million. Railway operating expenses shot up 21% on a year-over-year basis to $2,071 million, primarily due to higher fuel expenses and purchased services. Norfolk Southern’s operating ratio (operating expenses as a percentage of revenues) deteriorated to 62% in the third quarter from 60.2% in the year-ago quarter due to higher costs.
In the first nine months of 2022, NSC rewarded its shareholders with $3,165 million through dividends ($881 million) and share repurchases ($2,284 million).
Segmental Performance
Merchandise revenues climbed 13% year over year to $1,930 million. Volumes declined 2% while revenue per unit ascended 15% year over year.
Intermodal revenues augmented 16% year over year to $942 million. While segmental volumes decreased 5%, revenue per unit ascended 22%.
Coal revenues totaled $471 million, up 43% year over year. Coal volumes increased 14%. Revenue per unit jumped 25% in the reported quarter.
Liquidity
Norfolk Southern exited the third quarter with cash and cash equivalents of $1,214 million compared with $1,571 million at the end of March 2022. Norfolk Southern had a long-term debt of $14,463 million at the end of the September quarter compared with $13,691 million at March 2022 end.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
At this time, Norfolk Southern has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Norfolk Southern has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Norfolk Southern belongs to the Zacks Transportation - Rail industry. Another stock from the same industry, Union Pacific (UNP - Free Report) , has gained 8.4% over the past month. More than a month has passed since the company reported results for the quarter ended September 2022.
Union Pacific reported revenues of $6.57 billion in the last reported quarter, representing a year-over-year change of +18%. EPS of $3.19 for the same period compares with $2.57 a year ago.
For the current quarter, Union Pacific is expected to post earnings of $2.85 per share, indicating a change of +7.1% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Union Pacific. Also, the stock has a VGM Score of C.