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.
Norfolk Southern Up 20% in First 9 Months of 2019: Here's Why
Read MoreHide Full Article
Despite sluggish rail traffic volumes due to slowdown in global trade on account of the Sino–U.S. trade tensions and inclement weather in the United States, shares of Norfolk Southern Corporation (NSC - Free Report) outperformed its industry in the first nine months of 2019. Norfolk Southern has gained 20.1% compared with the industry’s 18.4% rally.
Factors Driving Growth
In order to improve productivity, Norfolk Southern is making constant efforts to streamline its operations. In line with its efforts to improve efficiencies, the company’s operating ratio (operating expenses as a percentage of revenues) in the first half of 2019 improved to 64.8% from 66.9% a year ago. Notably, lower the value of the metric the better. For 2019, it predicts operating ratio to improve at least 100 basis points compared with 65.4% achieved in 2018. Additionally, the company aims for a full-year operating ratio of 60% by 2021.
Furthermore, Norfolk Southern's new precision scheduled railroading operating plan, TOP21, aims to improve efficiency and customer service. The first phase of the program, which has been recently implemented, already resulted in multiple benefits. Following the implementation, the network efficiency of the Merchandise unit has improved impressively owing to reduced circuity, train miles and train start.
We are also impressed by the company’s focus on rewarding its shareholders through share repurchases and dividends. Last year, Norfolk Southern returned more than $3.6 billion through dividends ($844 million) and buybacks ($2,781 million). Moreover, it generated free cash flow worth $1.8 billion in 2018.
Continuing the trend, in the first half of 2019, the company returned $1.5 billion to its shareholders through dividends ($458 million) and buybacks ($1,050 million), reflecting a 36% year-over-year increase. Notably, Norfolk Southern has increased its quarterly dividend payout four times since the commencement of 2018. Free cash flow of $973 million was generated in the period. Robust free cash flow generation by the company supports the possibility of a dividend hike going forward.
Apart from Norfolk Southern, railroad operators like Union Pacific Corporation (UNP - Free Report) , CSX Corporation (CSX - Free Report) and Canadian Pacific Railway Limited (CP - Free Report) increased their respective dividend payouts this year.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.6% per year.
These 7 were selected because of their superior potential for immediate breakout.
Image: Bigstock
Norfolk Southern Up 20% in First 9 Months of 2019: Here's Why
Despite sluggish rail traffic volumes due to slowdown in global trade on account of the Sino–U.S. trade tensions and inclement weather in the United States, shares of Norfolk Southern Corporation (NSC - Free Report) outperformed its industry in the first nine months of 2019. Norfolk Southern has gained 20.1% compared with the industry’s 18.4% rally.
Factors Driving Growth
In order to improve productivity, Norfolk Southern is making constant efforts to streamline its operations. In line with its efforts to improve efficiencies, the company’s operating ratio (operating expenses as a percentage of revenues) in the first half of 2019 improved to 64.8% from 66.9% a year ago. Notably, lower the value of the metric the better. For 2019, it predicts operating ratio to improve at least 100 basis points compared with 65.4% achieved in 2018. Additionally, the company aims for a full-year operating ratio of 60% by 2021.
Furthermore, Norfolk Southern's new precision scheduled railroading operating plan, TOP21, aims to improve efficiency and customer service. The first phase of the program, which has been recently implemented, already resulted in multiple benefits. Following the implementation, the network efficiency of the Merchandise unit has improved impressively owing to reduced circuity, train miles and train start.
We are also impressed by the company’s focus on rewarding its shareholders through share repurchases and dividends. Last year, Norfolk Southern returned more than $3.6 billion through dividends ($844 million) and buybacks ($2,781 million). Moreover, it generated free cash flow worth $1.8 billion in 2018.
Continuing the trend, in the first half of 2019, the company returned $1.5 billion to its shareholders through dividends ($458 million) and buybacks ($1,050 million), reflecting a 36% year-over-year increase. Notably, Norfolk Southern has increased its quarterly dividend payout four times since the commencement of 2018. Free cash flow of $973 million was generated in the period. Robust free cash flow generation by the company supports the possibility of a dividend hike going forward.
Apart from Norfolk Southern, railroad operators like Union Pacific Corporation (UNP - Free Report) , CSX Corporation (CSX - Free Report) and Canadian Pacific Railway Limited (CP - Free Report) increased their respective dividend payouts this year.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.6% per year.
These 7 were selected because of their superior potential for immediate breakout.
See these time-sensitive tickers now >>