We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Here's Why Investors Should Avoid Norfolk Southern (NSC) Now
Read MoreHide Full Article
Norfolk Southern Corporation (NSC - Free Report) is currently mired in multiple headwinds, which we believe, have made it an unimpressive investment option.
Let’s delve deeper.
Southward Earnings Estimate Revisions: The Zacks Consensus Estimate for current-quarter earnings has been revised 5.8% downward over the past 60 days. For the current year, the consensus mark for earnings has moved 10.4% south in the same time frame. The unfavorable estimate revisions indicate brokers’ lack of confidence in the stock.
Bearish Industry Rank: The industry to which NSC belongs, currently has a Zacks Industry Rank of 233 (of 250 plus groups). Such an unfavorable rank places NSC in the bottom 12% of the Zacks industries. Studies show that 50% of a stock price movement is directly related to the performance of the industry group it belongs to.
A mediocre stock within a strong group is likely to outclass a robust stock in a weak industry. Therefore, reckoning the industry’s performance becomes imperative.
Weak Zacks Rank and Style Score: Norfolk Southern currently carries a Zacks Rank #5 (Strong Sell). Moreover, NSC’s current Momentum Style Score of C shows its short-term unattractiveness.
An Underperformer: The Norfolk Southern stock has lost 18.9% in a year's time compared with its industry’s 6.9% decline.
Image Source: Zacks Investment Research
Other Headwinds: NSC is being negatively impacted by weak freight conditions. The top line has been suffering due to below-par performances of all three key segments, namely, Merchandise, Intermodal and Coal. Revenues are likely to be weak throughout 2023. Our estimate for current-year total revenues indicates a 4.1% dip from 2022 actuals.
Supply-chain disruptions and slower network velocity are further challenges confronting the company. Owing to these headwinds, overall volumes have been weak. Moreover, costs have been high primarily due to expenses associated with the Eastern Ohio incident. Apart from low revenues, high costs are also affecting operating ratio (operating expenses as a percentage of revenues).
United Airlines is seeing steady recovery in domestic and international air-travel demand. Owing to this, UAL expects revenues for the September quarter to grow 10-13% year over year. Our projection for third-quarter total revenues hints at an increase of 11.4% year over year.
For third-quarter 2023, United Airlines anticipates capacity to improve 16% from the year-ago reported figure. The Zacks Consensus Estimate for UAL’s current-year earnings has been revised 19.7% upward over the past 60 days.
Improved air-travel demand, particularly on the domestic front, is aiding Delta. Due to the positive, DAL reported better-than-expected earnings per share and revenues in second-quarter 2023. Third-quarter earnings are forecast in the range of $2.2-$2.5 per share.
Management raised its earnings per share outlook for the current year. The company now estimates 2023 earnings (on an adjusted basis) in the band of $6-$7 per share (previous view: $6). The Zacks Consensus Estimate for DAL’s current-year earnings has been revised 21.5% upward over the past 60 days.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Here's Why Investors Should Avoid Norfolk Southern (NSC) Now
Norfolk Southern Corporation (NSC - Free Report) is currently mired in multiple headwinds, which we believe, have made it an unimpressive investment option.
Let’s delve deeper.
Southward Earnings Estimate Revisions: The Zacks Consensus Estimate for current-quarter earnings has been revised 5.8% downward over the past 60 days. For the current year, the consensus mark for earnings has moved 10.4% south in the same time frame. The unfavorable estimate revisions indicate brokers’ lack of confidence in the stock.
Bearish Industry Rank: The industry to which NSC belongs, currently has a Zacks Industry Rank of 233 (of 250 plus groups). Such an unfavorable rank places NSC in the bottom 12% of the Zacks industries. Studies show that 50% of a stock price movement is directly related to the performance of the industry group it belongs to.
A mediocre stock within a strong group is likely to outclass a robust stock in a weak industry. Therefore, reckoning the industry’s performance becomes imperative.
Weak Zacks Rank and Style Score: Norfolk Southern currently carries a Zacks Rank #5 (Strong Sell). Moreover, NSC’s current Momentum Style Score of C shows its short-term unattractiveness.
An Underperformer: The Norfolk Southern stock has lost 18.9% in a year's time compared with its industry’s 6.9% decline.
Image Source: Zacks Investment Research
Other Headwinds: NSC is being negatively impacted by weak freight conditions. The top line has been suffering due to below-par performances of all three key segments, namely, Merchandise, Intermodal and Coal. Revenues are likely to be weak throughout 2023. Our estimate for current-year total revenues indicates a 4.1% dip from 2022 actuals.
Supply-chain disruptions and slower network velocity are further challenges confronting the company. Owing to these headwinds, overall volumes have been weak. Moreover, costs have been high primarily due to expenses associated with the Eastern Ohio incident. Apart from low revenues, high costs are also affecting operating ratio (operating expenses as a percentage of revenues).
Stocks to Consider
Investors interested in the Zacks Transportation sector may consider stocks like United Airlines (UAL - Free Report) and Delta Air Lines (DAL - Free Report) . While UAL sports a Zacks Rank #1 (Strong Buy), DAL carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
United Airlines is seeing steady recovery in domestic and international air-travel demand. Owing to this, UAL expects revenues for the September quarter to grow 10-13% year over year. Our projection for third-quarter total revenues hints at an increase of 11.4% year over year.
For third-quarter 2023, United Airlines anticipates capacity to improve 16% from the year-ago reported figure. The Zacks Consensus Estimate for UAL’s current-year earnings has been revised 19.7% upward over the past 60 days.
Improved air-travel demand, particularly on the domestic front, is aiding Delta. Due to the positive, DAL reported better-than-expected earnings per share and revenues in second-quarter 2023. Third-quarter earnings are forecast in the range of $2.2-$2.5 per share.
Management raised its earnings per share outlook for the current year. The company now estimates 2023 earnings (on an adjusted basis) in the band of $6-$7 per share (previous view: $6). The Zacks Consensus Estimate for DAL’s current-year earnings has been revised 21.5% upward over the past 60 days.