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Norfolk Southern (NSC) Beats on Q4 Earnings, Misses Sales
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Leading U.S. railroad operator Norfolk Southern Corp. (NSC - Free Report) reported fourth-quarter 2016 earnings of $1.42 per share that beat the Zacks Consensus Estimate of $1.38.
The bottom line improved 18% year over year. Lower costs aided the bottom line in the final quarter of 2016.
Railway operating revenues in the final quarter of 2016 came in at $2,490 million, short of the Zacks Consensus Estimate of $2,501 million. Revenues also declined 1% on a year-over-year basis. Coal-related headwinds and reduced fuel surcharges continued to hurt the top line.
Income from railway operations climbed 19% to $761 million. Operating expenses decreased 8% year over year to $1,729 million. The company revealed that operating ratio (defined as operating expenses as a percentage of revenues) in the reported quarter improved 510 basis points on a year-over-year basis to 69.4% in the final quarter of 2016.
Segments
On a year-over-year basis, coal revenues declined 7% to $403 million. A soft utility market contributed to the 4% decline in volumes. We note that In fact, Norfolk Southern’s peers like Union Pacific Corp. (UNP - Free Report) , Kansas City Southern andCanadian Pacific Railway Ltd. (CP - Free Report) too have been struggling because of lower coal volumes.
Merchandise revenues dipped 1% year over year to $1.5 billion, while volumes declined 3%. The chemicals sub-group was the worst performer with revenues decreasing 7%. Revenues increased 4% at agriculture, climbed 6% at Metals/construction, fell 5% at Automotive and also declined 5% at paper/forest.
Intermodal revenues improved 4% year over year to $583 million. Volumes grew 7%.
Norfolk Southern Corporation Price, Consensus and EPS Surprise
Norfolk Southern exited 2016 with cash and cash equivalents of $956 million compared with $1,101 million at the end of 2015. This Zacks Rank # 3 (Hold) company had long-term debt of $9,562 million as against $9,393 million at end-2015. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Dividend Hiked
Norfolk Southern raised its quarterly cash dividend by 3% to 61 cents per share (annualized $2.44 per share). The first installment of the new dividend will be paid on Mar 10 to the shareholders on Feb. 3.
Outlook
The company aims to drive bottom-line growth by cutting costs. To attain the objective, it intends to cut costs by an additional $100 million in 2017. The company is on track to deliver annual savings to the tune of $650 million by 2020.
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Norfolk Southern (NSC) Beats on Q4 Earnings, Misses Sales
Leading U.S. railroad operator Norfolk Southern Corp. (NSC - Free Report) reported fourth-quarter 2016 earnings of $1.42 per share that beat the Zacks Consensus Estimate of $1.38.
The bottom line improved 18% year over year. Lower costs aided the bottom line in the final quarter of 2016.
Railway operating revenues in the final quarter of 2016 came in at $2,490 million, short of the Zacks Consensus Estimate of $2,501 million. Revenues also declined 1% on a year-over-year basis. Coal-related headwinds and reduced fuel surcharges continued to hurt the top line.
Income from railway operations climbed 19% to $761 million. Operating expenses decreased 8% year over year to $1,729 million. The company revealed that operating ratio (defined as operating expenses as a percentage of revenues) in the reported quarter improved 510 basis points on a year-over-year basis to 69.4% in the final quarter of 2016.
Segments
On a year-over-year basis, coal revenues declined 7% to $403 million. A soft utility market contributed to the 4% decline in volumes. We note that In fact, Norfolk Southern’s peers like Union Pacific Corp. (UNP - Free Report) , Kansas City Southern and Canadian Pacific Railway Ltd. (CP - Free Report) too have been struggling because of lower coal volumes.
Merchandise revenues dipped 1% year over year to $1.5 billion, while volumes declined 3%. The chemicals sub-group was the worst performer with revenues decreasing 7%. Revenues increased 4% at agriculture, climbed 6% at Metals/construction, fell 5% at Automotive and also declined 5% at paper/forest.
Intermodal revenues improved 4% year over year to $583 million. Volumes grew 7%.
Norfolk Southern Corporation Price, Consensus and EPS Surprise
Norfolk Souther Corporation Price, Consensus and EPS Surprise | Norfolk Souther Corporation Quote
Liquidity
Norfolk Southern exited 2016 with cash and cash equivalents of $956 million compared with $1,101 million at the end of 2015. This Zacks Rank # 3 (Hold) company had long-term debt of $9,562 million as against $9,393 million at end-2015. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Dividend Hiked
Norfolk Southern raised its quarterly cash dividend by 3% to 61 cents per share (annualized $2.44 per share). The first installment of the new dividend will be paid on Mar 10 to the shareholders on Feb. 3.
Outlook
The company aims to drive bottom-line growth by cutting costs. To attain the objective, it intends to cut costs by an additional $100 million in 2017. The company is on track to deliver annual savings to the tune of $650 million by 2020.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>