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Norfolk Southern (NSC) Up 2.4% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Norfolk Southern (NSC - Free Report) . Shares have added about 2.4% 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.
Second-Quarter Earnings
Norfolk Southern Corporation reported second-quarter 2018 earnings of $2.50 per share, surpassing the Zacks Consensus Estimate of $2.31. The bottom line also improved 46% on a year-over-year basis. Results were aided by a low effective tax rate.
Railway operating revenues in the quarter under review grossed $2,898 million, above the Zacks Consensus Estimate of $2,853.6 million. The top line also rose 10% on a year-over-year basis. Overall, volumes expanded 6% on the back of growth across all three segments.
Income from railway operations climbed 18% year over year to $1 billion. Operating expenses increased 6% year over year to $1.9 billion. Railway operating expenses rose due to higher fuel prices and incentive compensation as well as costs related to overall lower network velocity.
Norfolk Southern’s operating ratio (operating expenses as a percentage of revenues) in the second quarter of 2018 came in at 64.6% compared with 66.3% in the second quarter of 2017.
Segmental Revenues
On a year-over-year basis, coal revenues increased 4.3% to $466 million.
Merchandise revenues gained 7.6% year over year to $1,718 million.
Intermodal revenues rose 20.4% year over year to $714 million.
Liquidity
Norfolk Southern exited the second quarter with cash and cash equivalents of $430 million compared with $690 million at the end of 2017. The company had long-term debt of $9,146 million compared with $9,136 million as of Dec 31, 2017.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
At this time, Norfolk Southern has a subpar Growth Score of D, however its momentum is doing a lot better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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.
Our style scores indicate that the stock is more suitable for momentum investors than value investors.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Norfolk Southern has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Norfolk Southern (NSC) Up 2.4% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Norfolk Southern (NSC - Free Report) . Shares have added about 2.4% 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.
Second-Quarter Earnings
Norfolk Southern Corporation reported second-quarter 2018 earnings of $2.50 per share, surpassing the Zacks Consensus Estimate of $2.31. The bottom line also improved 46% on a year-over-year basis. Results were aided by a low effective tax rate.
Railway operating revenues in the quarter under review grossed $2,898 million, above the Zacks Consensus Estimate of $2,853.6 million. The top line also rose 10% on a year-over-year basis. Overall, volumes expanded 6% on the back of growth across all three segments.
Income from railway operations climbed 18% year over year to $1 billion. Operating expenses increased 6% year over year to $1.9 billion. Railway operating expenses rose due to higher fuel prices and incentive compensation as well as costs related to overall lower network velocity.
Norfolk Southern’s operating ratio (operating expenses as a percentage of revenues) in the second quarter of 2018 came in at 64.6% compared with 66.3% in the second quarter of 2017.
Segmental Revenues
On a year-over-year basis, coal revenues increased 4.3% to $466 million.
Merchandise revenues gained 7.6% year over year to $1,718 million.
Intermodal revenues rose 20.4% year over year to $714 million.
Liquidity
Norfolk Southern exited the second quarter with cash and cash equivalents of $430 million compared with $690 million at the end of 2017. The company had long-term debt of $9,146 million compared with $9,136 million as of Dec 31, 2017.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
At this time, Norfolk Southern has a subpar Growth Score of D, however its momentum is doing a lot better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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.
Our style scores indicate that the stock is more suitable for momentum investors than value investors.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Norfolk Southern has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.