Norfolk Southern Corp. ( NSC ), one of the
leading U.S. railroad companies, reported quarterly adjusted
earnings of $1.22 per share, surpassing the Zacks Consensus
Estimate of $1.17. However, the bottom line fell 0.8% from earnings
of $1.23 in the year-ago quarter. Adjusted earnings in the reported
quarter excluded a favorable impact of 19 cents related to a gain
from the sale of land.CSX CORP (CSX): Free Stock Analysis ReportKANSAS CITY SOU (KSU): Free Stock Analysis
ReportNORFOLK SOUTHRN (NSC): Free Stock Analysis
ReportUNION PAC CORP (UNP): Free Stock Analysis
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Total operating revenue was down 1.8% year over year at $2,738
million and failed to meet the Zacks Consensus Estimate of $2,772
million. On a year-over-year basis, Coal
revenues declined 17.0%, while General
Merchandise and Intermodal
revenues grew 2.3% and 8.7%, respectively.
In the first quarter, operating income was $691 million, down 7.2%
year over year. Operating expenses remained flat year over year at
$2,047 million, resulting in an operating ratio of 74.8%.
Norfolk exited the quarter with cash and cash equivalents of $672
million compared with $829 million in the year-ago quarter. The
company had long-term debt (including current portion) of $8,438
million compared with $8,432 million in 2012.
The company's board of directors approved a quarterly cash
dividend of 50 cents to shareholders of record on May 3, payable on
We believe the company is poised to benefit from strong pricing
momentum on the back of growing market demand and shortage in
truckload transportation. We expect pricing improvements at Norfolk
together with productivity gains to push the profitability level
However, we remain concerned about factors such as the prevailing
market condition in the core segment like Coal and uncertainties in
the present economic environment that would likely affect shipment.
Further, tightened railroad regulation and competitive pressure
also remain significant headwinds to the company's growth.
Norfolk, which operates with the likes of Union Pacific
Corporation ( UNP ), CSX
Corp. ( CSX
), and Kansas City Southern ( KSU ) carries a Zacks
Rank #3, implying a short-term Hold rating.