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Here's Why Investors Should Give Norfolk Southern Stock a Miss Now
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Key Takeaways
NSC is under pressure from increased expenses, weak liquidity and tariff-related challenges.
Earnings estimates for the December quarter and 2026 have been revised sharply downward.
NSC's shares have fallen 5.5% quarter-to-date amid continued operating cost and liquidity strains.
Norfolk Southern (NSC - Free Report) is facing mounting pressure from increased expenses and weak liquidity. Tariff-related woes are also hurting the company’s prospects, making it an unattractive choice for investors’ portfolios.
NSC: Key Risks to Watch
Southward Earnings Estimate Revision: The Zacks Consensus Estimate for the December quarter’s earnings has been revised 11.6% downward in the past 60 days. Meanwhile, for 2026, the consensus mark for earnings has been revised 2.22% downward in the same time frame.
The unfavorable estimate revision indicates brokers’ lack of confidence in the stock.
Dim Price Performance: The company’s price trend reveals that its shares have fallen 5.5% in the quarter-to-date period compared with the Transportation - Rail industry’s 3.8% decline.
Image Source: Zacks Investment Research
Weak Zacks Rank: NSC currently has a Zacks Rank #4 (Sell).
Bearish Industry Rank: The industry to which Norfolk Southern belongs currently has a Zacks Industry Rank of 223 (out of 243). Such an unfavorable rank places it in the bottom 8% of Zacks Industries. Studies show that 50% of a stock’s 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 outperform a robust stock in a weak industry. Hence, reckoning the industry’s performance becomes imperative.
Headwinds: NSC is mired in significant challenges, dampening the company’s prospects. The increased expenses and weak liquidity are weighing on the company’s bottom line. In the third quarter of 2025, the total operating expenses surged by 37.8% year over year.
Labor costs, comprising salaries and benefits, accounting for 36.8% of the total operating costs, increased by 6.5% year over year. Fuel expenses surged 9.7% year over year to $237 million.
Norfolk Southern continues to struggle with liquidity, reflected in its consistently weak and volatile current ratio (a measure of liquidity). The metric fell from 0.86 in 2021 to 0.76 in 2022, briefly improved to 1.24 in 2023, then slipped to 0.90 in 2024 and further to 0.79 in the second half of 2025. As of the third quarter of 2025, the ratio was 0.86, indicating ongoing pressure on the company’s ability to meet short-term obligations.
Moreover, companies like NSC, along with many others across the United States, are navigating a volatile macro environment marked by economic uncertainty, shifting tariff regulations and geopolitical tensions. This complexity is forcing firms to delay investments, revise forecasts and adapt quickly to remain competitive while managing rising compliance and operational risks.
EXPD has an expected earnings growth rate of 2.3% for the current year. The company has an encouraging earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average beat of 13.94%.
SKYW also sports a Zacks Rank #1.
SkyWest has an expected earnings growth rate of 33% for the current year. The company has an encouraging earnings surprise history. Its earnings topped the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average beat of 21.2%.
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Here's Why Investors Should Give Norfolk Southern Stock a Miss Now
Key Takeaways
Norfolk Southern (NSC - Free Report) is facing mounting pressure from increased expenses and weak liquidity. Tariff-related woes are also hurting the company’s prospects, making it an unattractive choice for investors’ portfolios.
NSC: Key Risks to Watch
Southward Earnings Estimate Revision: The Zacks Consensus Estimate for the December quarter’s earnings has been revised 11.6% downward in the past 60 days. Meanwhile, for 2026, the consensus mark for earnings has been revised 2.22% downward in the same time frame.
The unfavorable estimate revision indicates brokers’ lack of confidence in the stock.
Dim Price Performance: The company’s price trend reveals that its shares have fallen 5.5% in the quarter-to-date period compared with the Transportation - Rail industry’s 3.8% decline.
Image Source: Zacks Investment Research
Weak Zacks Rank: NSC currently has a Zacks Rank #4 (Sell).
Bearish Industry Rank: The industry to which Norfolk Southern belongs currently has a Zacks Industry Rank of 223 (out of 243). Such an unfavorable rank places it in the bottom 8% of Zacks Industries. Studies show that 50% of a stock’s 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 outperform a robust stock in a weak industry. Hence, reckoning the industry’s performance becomes imperative.
Headwinds: NSC is mired in significant challenges, dampening the company’s prospects. The increased expenses and weak liquidity are weighing on the company’s bottom line. In the third quarter of 2025, the total operating expenses surged by 37.8% year over year.
Labor costs, comprising salaries and benefits, accounting for 36.8% of the total operating costs, increased by 6.5% year over year. Fuel expenses surged 9.7% year over year to $237 million.
Norfolk Southern continues to struggle with liquidity, reflected in its consistently weak and volatile current ratio (a measure of liquidity). The metric fell from 0.86 in 2021 to 0.76 in 2022, briefly improved to 1.24 in 2023, then slipped to 0.90 in 2024 and further to 0.79 in the second half of 2025. As of the third quarter of 2025, the ratio was 0.86, indicating ongoing pressure on the company’s ability to meet short-term obligations.
Moreover, companies like NSC, along with many others across the United States, are navigating a volatile macro environment marked by economic uncertainty, shifting tariff regulations and geopolitical tensions. This complexity is forcing firms to delay investments, revise forecasts and adapt quickly to remain competitive while managing rising compliance and operational risks.
Stocks to Consider
Investors interested in the Zacks Transportation sector may consider Expeditors International of Washington (EXPD - Free Report) and SkyWest (SKYW - Free Report) .
EXPD currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
EXPD has an expected earnings growth rate of 2.3% for the current year. The company has an encouraging earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average beat of 13.94%.
SKYW also sports a Zacks Rank #1.
SkyWest has an expected earnings growth rate of 33% for the current year. The company has an encouraging earnings surprise history. Its earnings topped the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average beat of 21.2%.