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Will Norfolk Southern (NSC) Deliver a Beat in Q1 Earnings?

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Virginia-based, Norfolk Southern Corporation (NSC - Free Report) is scheduled to report first-quarter 2017 results on Apr 26, before the market opens.

Last quarter, the company posted a positive earnings surprise of 2.9%. Moreover, the company’s bottom line surpassed the Zacks Consensus Estimate in all of the trailing four quarters, with an average beat of 10.88%. Let’s see how things are shaping up for this announcement.

Earnings Whispers

Our proven model shows that Norfolk Southern is likely to beat the Zacks Consensus Estimate this quarter because it has the perfect combination of two key ingredients.

Zacks ESP: The Earnings ESP for Norfolk Southern is +0.74% as the Most Accurate estimate is pegged at $1.36, while the Zacks Consensus Estimate is at $1.35. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Norfolk Southern carries a Zacks Rank #3 (Hold). Please note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings estimates.

Meanwhile, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.

Factors at Play

Norfolk Southern is making constant efforts to streamline its operations in order to increase productivity. To counter the coal-related headwinds, the company is looking to cut costs in order to drive the bottom line. The company’s first-quarter results are likely to be benefited by its cost-cutting measures.

Coal volumes are likely to rise in the first quarter buoyed by favorable conditions. The company's move to hike its quarterly dividend is also encouraging.  The company announced a 3% raise in its dividend in the first quarter. We are, however, concerned about the company’s high debt levels.

According to Wells Fargo, the improvement in coal prices should benefit railroads immensely. According to the firm, Eastern Rails like Norfolk Southern are likely to benefit from this scenario.

Price Performance

Shares of Norfolk Southern outperformed the Zacks categorized Transportation - Rail industry over the last three months. The stock gained 2.0% while the industry gained a meager 0.58%.

Stocks to Consider

Investors interested in the transportation space may also consider the following stocks. This is because our model shows that these companies also possess the right combination of elements to post an earnings beat this quarter.

American Airlines (AAL - Free Report) has an Earnings ESP of +7.55% and a Zacks Rank #3. The company will report first-quarter results on Apr 27. You can see the complete list of today’s Zacks #1 Rank stocks here.

Air Lease (AL - Free Report) has an Earnings ESP of +1.16% and a Zacks Rank #3. The company will report first-quarter results on May 4.

C.H. Robinson (CHRW - Free Report) has an Earnings ESP of +2.50% and a Zacks Rank #3. The company will report first-quarter results on Apr 25.

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