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What's in Offing for Norfolk Southern (NSC) in Q1 Earnings?

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Norfolk Southern Corporation (NSC - Free Report) is scheduled to report first-quarter 2021 results on Apr 28, before market open.

The Zacks Consensus Estimate for the company’s first-quarter earnings has been revised downward by approximately 4.5% in the last 60 days. However, it has an impressive earnings history, having outperformed the Zacks Consensus Estimate in each of the preceding four quarters. It has a trailing four-quarter earnings surprise of 10.2%, on average.

Let’s see whether the company is able to retain its beat streak in its first-quarter results as well.

Norfolk Southern Corporation Price and EPS Surprise

 

Norfolk Southern Corporation Price and EPS Surprise

Norfolk Southern Corporation price-eps-surprise | Norfolk Southern Corporation Quote

 

Factors to Note

Volumes are likely to have been weak in the first quarter of 2021 due to coronavirus-induced freight slowdown. Notably, the Zacks Consensus Estimate for volumes suggests a 2.1% dip from the December-quarter’s reported figure. Adverse weather conditions that were prevalent in February are also likely to have hurt first-quarter volumes. This anticipated softness in volumes is expected to get reflected in total revenues. The consensus mark for revenues indicates a marginal decline from the first-quarter 2020’s reported number.

Additionally, The Zacks Consensus Estimate for merchandise volumes indicates a 2.8% plunge from the year-ago quarter’s reported number. The same for merchandise revenues suggests a 3.1% drop from first-quarter 2020’s reported number. The Zacks Consensus Estimate for coal revenues also indicates a 3.4% plunge from the year-ago quarter’s reported figure.

However, increased efficiency and reduced costs owing to the precision scheduled railroading (“PSR”) model is expected to have aided the bottom line. Benefits from the PSR model is likely to get reflected in the operating ratio (operating expenses, as a percentage of revenues). The Zacks Consensus Estimate for operating ratio is pegged at 63%, better than the year-ago quarter’s reported figure of 78%. Notably, lower the value of the metric the better.

What Does the Zacks Model Say?

Our proven model does not conclusively 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 an earnings beat. However, that is not the case here as elaborated 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 and the Zacks Consensus Estimate are pegged at $2.55. 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.

Highlights of Q4 Earnings

Norfolk Southern's earnings $2.64 per share surpassed the Zacks Consensus Estimate of $2.48. Moreover, the bottom line increased 3.5% on a year-over-year basis on lower costs. The company’s railway operating revenues in the quarter under review came in at $2,573 million, outpacing the Zacks Consensus Estimate of $2,556.4 million. However, the top line declined 4.4% year over year due to 1% dip in total volumes and a 3% decline in revenues per unit.

Stocks to Consider

Investors interested in the broader Transportation sector may consider JetBlue Airways Corporation (JBLU - Free Report) , Herc Holdings Inc. (HRI - Free Report) and Westinghouse Air Brake Technologies Corporation (WAB - Free Report) as these stocks possess the right combination of elements to beat on earnings this reporting cycle.

Westinghouse Air Brake Technologies has an Earnings ESP of +4.14% and is Zacks #3 Ranked, presently. The company will release first-quarter 2021 results on Apr 29.

Herc Holdings has an Earnings ESP of +18.8% and carries a Zacks Rank of 2, at present. The company will release first-quarter 2021 results on Apr 22.

JetBlue Airways has an Earnings ESP of +6.9 and carries a Zacks Rank #3. The company is set to release first-quarter 2021 earnings numbers on Apr 27.

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