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Norfolk Southern (NSC) Down 7.3% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Norfolk Southern (NSC - Free Report) . Shares have lost about 7.3% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Norfolk Southern due for a breakout? 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.

Earnings Miss at Norfolk Southern in Q2

Norfolk Southern's earnings of $2.7 per share, missing the Zacks Consensus Estimate of $2.77. However, the bottom line improved 8% on a year-over-year basis owing to lower costs.

Railway operating revenues in the quarter under review came in at $2,925 million, lagging the Zacks Consensus Estimate of $2,928.6 million. However, the top line inched up 1% year over year on the back of 5% increase in revenue per unit.

Income from railway operations rose 4% year over year to $1,065 million. Operating expenses declined marginally on a year-over-year basis to $1,860 million owing to lower fuel price and expenses related to purchased services and rents. Norfolk Southern’s operating ratio in the second quarter improved to 63.6% from 64.6% a year ago. Notably, lower the value of the metric the better.

Segmental Performance


On a year-over-year basis, coal revenues totaled $468 million, up marginally year over year. Coal volumes fell 6%. Revenue per unit increased 7% in the reported quarter.

Merchandise revenues inched up 2.2% year over year to $1,756 million. Merchandise volumes slipped 3%. Revenue per unit climbed 5% for the segment.

Intermodal revenues dipped 1.4% year over year to $701 million. Segmental volumes declined 4%. Revenue per unit was up 2% for the segment.

Liquidity

The company exited the second quarter with cash and cash equivalents of $274 million compared with $358 million at the end of 2018. The company had long-term debt of $11,076 million compared with $10,560 million as of Dec 31, 2018.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

Currently, Norfolk Southern has an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, 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.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Norfolk Southern has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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