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Will High Fuel Costs Mar Norfolk Southern's (NSC) Q3 Earnings?

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Norfolk Southern Corporation (NSC - Free Report) is scheduled to report third-quarter 2021 results on Oct 27, before market open.

Let’s see how things are shaping up for this earnings season.

Norfolk Southern Corporation Price and EPS Surprise

 

Norfolk Southern Corporation Price and EPS Surprise

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

 

Volumes are likely to have been weak in third-quarter 2021 due to rising cases of the Delta variant in the United States. The Zacks Consensus Estimate for total carload volumes suggests a 1.4% decline on a sequential basis.  

Increase in fuel costs is likely to have hurt the railroad company’s third-quarter bottom line and the operating ratio (operating expenses, as a percentage of revenues). The Zacks Consensus Estimate for third-quarter operating ratio is pegged at 60%, which suggests an increase from second-quarter 2021’s reported figure of 58%. Notably, lower the value of the metric the better.

The Zacks Consensus Estimate for merchandise volumes indicates a 4.5% increase from the year-ago period’s levels. The same for merchandise revenues suggests a 8.4% rise from third-quarter 2020’s reported number. The Zacks Consensus Estimate for coal revenues indicates a rise of 20% year over year.

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 $2.89. 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 Q2 Earnings

Norfolk Southern's earnings of $3.28 per share surpassed the Zacks Consensus Estimate of $2.94. The bottom line skyrocketed more than 100% year over year on higher revenues. Railway operating revenues in the quarter under review came in at $2,799 million, outperforming the Zacks Consensus Estimate of $2,751.3 million. The top line increased 34% year over year.

Stocks to Consider

Investors interested in the broader Transportation  sector may also consider United Parcel Service, Inc. (UPS - Free Report) , Knight-Swift Transportation Holdings Inc. (KNX - Free Report) and C.H. Robinson Worldwide, Inc. (CHRW - Free Report) . These stocks possess the right combination of elements to beat on earnings this reporting cycle.

UPS has an Earnings ESP of +1.27% and is Zacks #3 Ranked, presently. The company will release third-quarter 2021 results on Oct 26.

Knight-Swift has an Earnings ESP of +0.72% and carries a Zacks Rank #2 at present. The company will release third-quarter 2021 results on Oct 20.

C.H. Robinson has an Earnings ESP of +1.06% and is currently a #2 Ranked player. The company will release third-quarter 2021 results on Oct 26.
 

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