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Norfolk Southern (NSC) Down 4.6% Since Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Norfolk Southern Corporation (NSC - Free Report) . Shares have lost about 4.6% in the past month, outperforming the market.
Will the recent negative trend continue leading up to its next earnings release, or is NSC due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Recent Earnings
Norfolk Southern reported fourth-quarter 2017 earnings (excluding $12.10 from non-recurring items) of $1.69 per share, surpassing the Zacks Consensus Estimate of $1.56. The bottom line also expanded 19% on a year-over-year basis. Results were aided by higher revenues.
Railway operating revenues in fourth-quarter 2017 came in at $2,669 million, above the Zacks Consensus Estimate of $2,664.5 million. The top line also improved 7% on a year-over-year basis. Overall volumes grew 5% on the back of impressive performances at key segments like coal, merchandise and intermodal.
Income from railway operations (excluding the tax reform related $151 million benefit) climbed 13% year over year to $863 million. Operating expenses decreased 4% year over year to $1.7 billion. Railway operating expenses were reduced by $151 million due to the tax reform.
Markedly, Norfolk Southern revealed that adjusted operating ratio (operating expenses as a percentage of revenues) in the reported quarter improved to 170 basis points (year over year) 67.7%. Adjusted operating ratio came in at 67.4% in 2017, reflecting an improvement of 150 basis points from the 2016 figure.
Segmental Revenues
On a year-over-year basis, coal revenues surged 5.7% to $426 million.
Merchandise revenues increased 4.8% year over year to $1,576 million.
Intermodal revenues rose 14.5% year over year to $667 million.
Liquidity
The company exited 2017 with cash and cash equivalents of $690 million compared with $956 million at the end of 2016. The company, which aims to invest $1.8 billion in 2018 pertaining to safety of its rail network among other things, had long-term debt of $9,136 million compared with $9,562 million at the end of 2016.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month. There has been one revision higher for the current quarter compared to one lower. While looking back an additional 30 days, we can see even more upward momentum.
At this time, NSC has an average Growth Score of C, however its Momentum is doing a lot better with an A. However, the stock was also allocated a grade of D on the value side, putting it in the bottom 40% 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.
Our style scores indicate that the stock is more suitable for momentum investors than growth investors.
Outlook
NSC has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Norfolk Southern (NSC) Down 4.6% Since Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Norfolk Southern Corporation (NSC - Free Report) . Shares have lost about 4.6% in the past month, outperforming the market.
Will the recent negative trend continue leading up to its next earnings release, or is NSC due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Recent Earnings
Norfolk Southern reported fourth-quarter 2017 earnings (excluding $12.10 from non-recurring items) of $1.69 per share, surpassing the Zacks Consensus Estimate of $1.56. The bottom line also expanded 19% on a year-over-year basis. Results were aided by higher revenues.
Railway operating revenues in fourth-quarter 2017 came in at $2,669 million, above the Zacks Consensus Estimate of $2,664.5 million. The top line also improved 7% on a year-over-year basis. Overall volumes grew 5% on the back of impressive performances at key segments like coal, merchandise and intermodal.
Income from railway operations (excluding the tax reform related $151 million benefit) climbed 13% year over year to $863 million. Operating expenses decreased 4% year over year to $1.7 billion. Railway operating expenses were reduced by $151 million due to the tax reform.
Markedly, Norfolk Southern revealed that adjusted operating ratio (operating expenses as a percentage of revenues) in the reported quarter improved to 170 basis points (year over year) 67.7%. Adjusted operating ratio came in at 67.4% in 2017, reflecting an improvement of 150 basis points from the 2016 figure.
Segmental Revenues
On a year-over-year basis, coal revenues surged 5.7% to $426 million.
Merchandise revenues increased 4.8% year over year to $1,576 million.
Intermodal revenues rose 14.5% year over year to $667 million.
Liquidity
The company exited 2017 with cash and cash equivalents of $690 million compared with $956 million at the end of 2016. The company, which aims to invest $1.8 billion in 2018 pertaining to safety of its rail network among other things, had long-term debt of $9,136 million compared with $9,562 million at the end of 2016.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month. There has been one revision higher for the current quarter compared to one lower. While looking back an additional 30 days, we can see even more upward momentum.
Norfolk Southern Corporation Price and Consensus
Norfolk Southern Corporation Price and Consensus | Norfolk Souther Corporation Quote
VGM Scores
At this time, NSC has an average Growth Score of C, however its Momentum is doing a lot better with an A. However, the stock was also allocated a grade of D on the value side, putting it in the bottom 40% 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.
Our style scores indicate that the stock is more suitable for momentum investors than growth investors.
Outlook
NSC has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.