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Norfolk Southern (NSC) Q4 Earnings Top, Dip Y/Y on Low Volumes

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Norfolk Southern Corporation’s (NSC - Free Report) fourth-quarter 2019 earnings of $2.55 per share surpassed the Zacks Consensus Estimate of $2.29. However, the bottom line dipped nearly 1% on a year-over-year basis due to low volumes.

Railway operating revenues in the quarter under review came in at $2,690 million, marginally missing the Zacks Consensus Estimate of $2,690.3 million. The top line also declined 7.1% year over year due to disappointing revenues at the merchandise, coal and intermodal units. Overall volumes decreased 9%.

Income from railway operations declined 11% year over year to $962 million. Operating expenses fell 5% on a year-over-year basis to $1,728 million, primarily owing to lower fuel costs as well as expenses related to compensation and benefits. Norfolk Southern’s operating ratio (operating expenses as a percentage of revenues) in the fourth quarter deteriorated 140 basis points to 64.2%. Notably, lower the value of the metric the better.

Norfolk Southern Corporation Price, Consensus and EPS Surprise

 

Norfolk Southern Corporation Price, Consensus and EPS Surprise

Norfolk Southern Corporation price-consensus-eps-surprise-chart | Norfolk Southern Corporation Quote


Segmental Performance

On a year-over-year basis, coal revenues totaled $363 million, down 21% year over year. Coal volumes contracted 21%. Revenue per unit inched up 1% in the reported quarter.

Merchandise revenues dipped 3% to $1,630 million. Segmental volumes fell 6%. Revenue per unit improved 3% for the segment.

Intermodal revenues decreased 8% year over year to $697 million. Segmental volumes also declined 8%. Revenue per unit was unaltered on a year-over-year basis.

Liquidity & Share Buyback

This Zacks Rank #3 (Hold) company exited the fourth quarter with cash and cash equivalents of $580 million compared with $358 million at the end of 2018. The company had long-term debt of $11,880 million compared with $10,560 million as of Dec 31, 2018. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Dividend Update

The company’s board cleared a quarterly cash dividend of 94 cents per share, payable to shareholders on Mar 10 of record as of Feb 7. It paid out dividends for 150 consecutive quarters.

Upcoming Releases

Investors interested in the broader Transportation sector are keenly awaiting fourth-quarter earnings reports from key players, namely like United Parcel Service, Inc. (UPS - Free Report) , SkyWest, Inc. (SKYW - Free Report) and Old Dominion Freight Line, Inc. (ODFL - Free Report) . While UPS and SkyWest will report fourth-quarter earnings numbers on Jan 30, Old Dominion will release the same on Feb 6.

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