A month has gone by since the last earnings report for Norfolk Southern (
NSC Quick Quote NSC - Free Report) . Shares have added about 5.2% 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.
Earnings Beat at Norfolk Southern in Q1
Quarterly earnings (excluding $1.28 from non-recurring items) of $3.32 per share beat the Zacks Consensus Estimate of $3.15 and improved 13.3% year over year.
Railway operating revenues were $3,132 million in the quarter under review, beating the Zacks Consensus Estimate of $3,099.8 million. The top line increased 7.5% year over year, with all key segments, including Merchandise and coal, registering improvements in revenues. Total revenue per unit rose 8% year over year, driven by higher fuel surcharges and pricing. Income from railway operations climbed 1% year over year to $1,098 million.
Railway operating expenses shot up 11% on a year-over-year basis to $2,034 million primarily due to higher fuel expenses and cost on purchased services. Norfolk Southern’s operating ratio (operating expenses as a percentage of revenues) improved to 64.9% in the first quarter from 62.8% in the year-ago quarter due to higher costs. In the first three months of 2023, NSC paid out dividends worth $307 million and repurchased shares worth $163 million. Segmental Performance
Merchandise’s revenues climbed 12% year over year to $1,878 million. Volumes grew 5%, whereas revenue per unit ascended 7% year over year.
Intermodal’s revenues fell 5% year over year to $814 million. While segmental volumes decreased 4%, revenue per unit ascended 1%. Coal’s revenues totaled $440 million, up 13% year over year. Coal volumes increased 5%. Revenue per unit jumped 8% in the reported quarter. Liquidity
Norfolk Southern exited first-quarter 2023 with cash and cash equivalents of $552 million compared with $456 million at the end of 2022. NSC had a long-term debt of $14,585 million at the end of the March-end quarter compared with $14,479 million at 2022 end.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -6.96% due to these changes.
At this time, Norfolk Southern has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. 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.
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.