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Leading U.S. railroad operator Norfolk Southern Corp. (NSC - Free Report) reported third-quarter 2016 earnings of $1.55 per share that beat the Zacks Consensus Estimate of $1.45. Lower costs contributed to the earnings beat. The bottom line, however, declined 1.3% year over year.
Operating revenues of $2,524 million edged past the Zacks Consensus Estimate of $2,521 million. Revenues declined 7% year over year owing to persistent coal-related headwinds.
Income from railway operations declined marginally to $820 million. Operating expenses decreased 9.9% year over year to $1,704 million. The company’s operating ratio was 67.5% in the reported quarter as against 69.7% in the prior-year period. The ratio was 68.7% in the first nine months of the year.
Segments
On a year-over-year basis, coal revenues declined 17.6% to $397 million. Above-average stockpiles, coupled with soft natural gas prices, resulted in a 15% decline in volumes.
Merchandise revenues dipped 3.6% year over year to $1,552 million, while volumes declined 4%. The chemicals sub-group was the worst performer with revenues decreased 10%. Revenues remained flat at agriculture, inched up 2% at Metals/construction, fell 4% at Automotive and declined 6% at paper/forest.
Intermodal revenues deteriorated 7% year over year to $575 million. Volumes declined 1%.
NorfolkSouthern exited the third quarter with cash and cash equivalents of $984 million compared with $1,101 million at the end of 2015. The company had long-term debt of $9,555 million as against $9,393 million at end-2015.
Our Take
We are concerned about the lackluster performance by the company’s coal segment. However, the company’s aim to achieve productivity savings of approximately $250 million and an operating ratio of below 70% in the current year is encouraging. We note that other companies from the railroad space like Union Pacific Corporation (UNP - Free Report) and Kansas City Southern are also suffering from coal-related woes.
For 2016, the Zacks Consensus Estimate for Copa Holdings has climbed 12 cents to $4.57 per share over the last two months.
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Norfolk Southern (NSC) Q3 Earnings & Sales Beat Estimates
Leading U.S. railroad operator Norfolk Southern Corp. (NSC - Free Report) reported third-quarter 2016 earnings of $1.55 per share that beat the Zacks Consensus Estimate of $1.45. Lower costs contributed to the earnings beat. The bottom line, however, declined 1.3% year over year.
Operating revenues of $2,524 million edged past the Zacks Consensus Estimate of $2,521 million. Revenues declined 7% year over year owing to persistent coal-related headwinds.
Income from railway operations declined marginally to $820 million. Operating expenses decreased 9.9% year over year to $1,704 million. The company’s operating ratio was 67.5% in the reported quarter as against 69.7% in the prior-year period. The ratio was 68.7% in the first nine months of the year.
Segments
On a year-over-year basis, coal revenues declined 17.6% to $397 million. Above-average stockpiles, coupled with soft natural gas prices, resulted in a 15% decline in volumes.
Merchandise revenues dipped 3.6% year over year to $1,552 million, while volumes declined 4%. The chemicals sub-group was the worst performer with revenues decreased 10%. Revenues remained flat at agriculture, inched up 2% at Metals/construction, fell 4% at Automotive and declined 6% at paper/forest.
Intermodal revenues deteriorated 7% year over year to $575 million. Volumes declined 1%.
NORFOLK SOUTHRN Price, Consensus and EPS Surprise
NORFOLK SOUTHRN Price, Consensus and EPS Surprise | NORFOLK SOUTHRN Quote
Cash Position
NorfolkSouthern exited the third quarter with cash and cash equivalents of $984 million compared with $1,101 million at the end of 2015. The company had long-term debt of $9,555 million as against $9,393 million at end-2015.
Our Take
We are concerned about the lackluster performance by the company’s coal segment. However, the company’s aim to achieve productivity savings of approximately $250 million and an operating ratio of below 70% in the current year is encouraging. We note that other companies from the railroad space like Union Pacific Corporation (UNP - Free Report) and Kansas City Southern are also suffering from coal-related woes.
Zacks Rank & A Stock to Consider
NorfolkSouthern has a Zacks Rank #3 (Hold). A better-ranked stock in the transportation space is Copa Holdings (CPA - Free Report) , which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
For 2016, the Zacks Consensus Estimate for Copa Holdings has climbed 12 cents to $4.57 per share over the last two months.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>