We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
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.
Norfolk Southern Poised Well on Dividends Amid Freight Woes
Read MoreHide Full Article
Norfolk Southern’s (NSC - Free Report) proactive cost-cutting initiatives are boosting the company’s operational efficiency. However, NSC is grappling with economic uncertainties, weak freight demand and lackluster liquidity.
Factors Favoring NSC
NSC strengthens its operations with robust cost-cutting initiatives, resulting in significant savings and improved efficiency. By strategically moving more than 320 locomotives into storage or offline, the company reduced fuel consumption, maintenance expenses and overtime costs by approximately 20% in the second quarter of 2024, enhancing reliability and efficiency.
The restructured operating plan removed 7,000 cars from active service, eliminating $150 million in annual service recovery costs and boosting Norfolk Southern's financial health, impacting the bottom line for investors. NSC’s commitment to rewarding its shareholders through dividends and buybacks is encouraging. In the second quarter of 2024, NSC paid out a quarterly dividend of $1.35 per share to its shareholders, marking it to be its 167th consecutive quarterly dividend since 1982.
Dividend stocks generally belong to mature companies that are less susceptible to significant market swings and act as a hedge against uncertainty-induced stock market volatility as is the case currently. They offer downside protection with their consistent increase in payouts. These companies have strong fundamentals like a sustainable business model, a long track of profitability, rising cash flows and a strong balance sheet.
NSC: Key Risks to Watch
Norfolk Southern is grappling with headwinds like continued economic uncertainties and weak freight demand. High inflation is adversely impacting the company’s financial stability.
In the second quarter of 2024, NSC reported a current ratio (a measure of liquidity) of 0.63, indicating potential challenges in meeting its short-term obligations. A current ratio of less than 1 suggests that the company may struggle with liquidity.
The Ohio incident on Feb. 3, 2023 continues to impact Norfolk Southern’s prospects. In the first half of 2024, the company reported $527 million in expenses related to the incident. Although insurance recoveries have offered some relief, Norfolk Southern still faces substantial costs associated with this event.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Norfolk Southern Poised Well on Dividends Amid Freight Woes
Norfolk Southern’s (NSC - Free Report) proactive cost-cutting initiatives are boosting the company’s operational efficiency. However, NSC is grappling with economic uncertainties, weak freight demand and lackluster liquidity.
Factors Favoring NSC
NSC strengthens its operations with robust cost-cutting initiatives, resulting in significant savings and improved efficiency. By strategically moving more than 320 locomotives into storage or offline, the company reduced fuel consumption, maintenance expenses and overtime costs by approximately 20% in the second quarter of 2024, enhancing reliability and efficiency.
The restructured operating plan removed 7,000 cars from active service, eliminating $150 million in annual service recovery costs and boosting Norfolk Southern's financial health, impacting the bottom line for investors. NSC’s commitment to rewarding its shareholders through dividends and buybacks is encouraging. In the second quarter of 2024, NSC paid out a quarterly dividend of $1.35 per share to its shareholders, marking it to be its 167th consecutive quarterly dividend since 1982.
Some other dividend-paying stocks in the Zacks Transportation - Rail industry are Union Pacific (UNP - Free Report) and Canadian National Railway (CNI - Free Report) .
Dividend stocks generally belong to mature companies that are less susceptible to significant market swings and act as a hedge against uncertainty-induced stock market volatility as is the case currently. They offer downside protection with their consistent increase in payouts. These companies have strong fundamentals like a sustainable business model, a long track of profitability, rising cash flows and a strong balance sheet.
NSC: Key Risks to Watch
Norfolk Southern is grappling with headwinds like continued economic uncertainties and weak freight demand. High inflation is adversely impacting the company’s financial stability.
In the second quarter of 2024, NSC reported a current ratio (a measure of liquidity) of 0.63, indicating potential challenges in meeting its short-term obligations. A current ratio of less than 1 suggests that the company may struggle with liquidity.
The Ohio incident on Feb. 3, 2023 continues to impact Norfolk Southern’s prospects. In the first half of 2024, the company reported $527 million in expenses related to the incident. Although insurance recoveries have offered some relief, Norfolk Southern still faces substantial costs associated with this event.