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CSX Corporation (CSX) - $25 value - yours FREE >>
Norfolk Southern Corporation (NSC) - $25 value - yours FREE >>
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Norfolk Southern (NSC) Q2 Earnings Likely to Disappoint
Norfolk Southern Corp (NSC - Free Report) is slated to report second-quarter 2016 results on Jul 27 before market opens.
Last quarter, Norfolk Southern recorded a positive earnings surprise of 32.99%. The company posted an earnings surprise in two of the last four quarters, with an average beat of 9.36%.
Factors at Play
Norfolk Southern is expected to benefit from streamlining its operations and an enhanced focus on expense management. Its target of saving over $650 million annually by cutting costs should boost the bottom line. The company’s top line should also benefit from the expanded Panama canal as U.S. East-west traffic is expected to increase with higher number of shipments docking on Eastern ports.
However, declining coal volumes as a result of lower demand and subdued economic growth will hamper the company’s revenues as seen in the case of other railroad companies such as Kansas City Southern and Union Pacific Corporation. Moreover high level of competition from peers such as CSX Corporation (CSX - Free Report) could mar the company’s performance.
NORFOLK SOUTHRN Price and EPS Surprise
NORFOLK SOUTHRN Price and EPS Surprise | NORFOLK SOUTHRN Quote
Earnings Whispers
Our proven model does not conclusively show that Norfolk Southern is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below.
Zacks ESP: The Earnings ESP for the company currently stands at -0.74%. This is because both the Most Accurate estimate stands at $1.34 while the Zacks Consensus Estimate is $1.35.
Zacks Rank: Norfolk Southern carries a Zacks Rank #3 which increases the predictive power of ESP. However, the company’s negative ESP makes surprise prediction difficult.
Please note that we caution against Sell-rated stocks (#4 or 5) going into an earnings announcement especially when the company is seeing negative estimate revisions momentum.
Stocks to Consider
Here is a company you may want to consider instead, as our model shows that it has the right combination of elements to post an earnings beat this quarter:
LATAM Airlines Group S.A. has an earnings ESP of over +100% and a Zacks Rank #2.
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