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What's in Store for Norfolk Southern (NSC) in Q3 Earnings?

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Norfolk Southern Corporation (NSC - Free Report) is scheduled to report third-quarter 2020 results on Oct 28, before market open.

The Zacks Consensus Estimate for third-quarter earnings has improved 7.3% to $2.36 per share over the past 60 days. However, the company has an impressive earnings history as its bottom line outperformed the Zacks Consensus Estimate in each of the preceding four quarters, the average being 9.9%.

Let’s discuss the factors that are likely to have impacted the company’s September-quarter performance.

We expect Norfolk Southern's third-quarter 2020 results to be hurt by tepid volumes as was the case in the first two quarters of the year. Weakness in key units like coal and intermodal is likely to have dented the company's volumes in the September quarter.

Coronavirus-induced supply-chain disruptions are also expected to have affected Norfolk Southern’s performance in the to-be-reported quarter. Intermodal revenues too are expected to have declined due to fall in international volumes due on account of the prevalent pandemic crisis and excess truck capacity.

However, reduced costs, courtesy of the precision scheduled railroading model, might have aided the bottom line. In the current scenario of dwindling revenues, low fuel costs are likely to have provided cushion to the bottom line

What Does the Zacks Model Say?

Our proven model does not predict an earnings beat for Norfolk Southern this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of a positive earnings surprise. However, this is not the case as shown below. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP:  Norfolk Southern has an Earnings ESP of 0.00% as the Most Accurate Estimate is in line with the Zacks Consensus Estimate of $2.36. 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, currently.

Highlights of Q2 Earnings

Norfolk Southern's earnings of $1.53 per share surpassed the Zacks Consensus Estimate of $1.39. However, the bottom line plunged 43% on a year-over-year basis. Meanwhile, the railway operating revenues in the quarter under review came in at $2,085 million, edging past the Zacks Consensus Estimate of $2,061.5 million. The top line, however, declined 29% year over year.

Stocks to Consider

Investors interested in the broader Transportation sector may check out a few stocks like Westinghouse Air Brake Technologies Corporation (WAB - Free Report) , Werner Enterprises (WERN - Free Report) and Schneider National (SNDR - Free Report) as these possess the perfect combination of elements to beat estimates this earnings season.

Westinghouse Air Brake Technologies Corporation has an Earnings ESP of +2.78% and a Zacks Rank of1, presently. The company will release third-quarter 2020 results on Oct 28.

Werner Enterprises has an Earnings ESP of +1.29% and a Zacks Rank of 3, presently. The company will release third-quarter 2020 results on Oct 29.

Schneider National has an Earnings ESP of +1.82% and a Zacks Rank #2, presently. The company will release third-quarter 2020 results on Oct 29.

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