Norfolk Southern Corp.
) reported second-quarter 2014 adjusted earnings of $1.79 per share
that beat the Zacks Consensus Estimate of $1.74 and exceeded the
year-ago number of $1.46 per share. Significant growth across all
commodity groups and a substantial improvement in operating ratio
drove gains across the company, supporting strong earnings this
Total operating revenue was up 9% year over year at $3.042
billion and was marginally higher than the Zacks Consensus Estimate
of $3.027 billion. Carloads grew 8% year over year.
On a year-over-year basis, Metals and Construction rose 17%,
Intermodal grew 11%, Metals and Construction rose 17%, Chemicals
climbed 10%, Coal grew 7%, Agriculture moved up 5%, Automotive was
up 3% and Paper increased 2%.
Operating income was $1 billion, up 22% year over year.
Operating ratio improved 500 basis points year over year to
Norfolk exited the second quarter with cash and cash equivalents
of $1,667 million compared with $1,443 million at year-end 2013.
The company had long-term debt (including current portion) of $8.8
billion, which decreased from $8.9 billion at year-end 2013.
We believe Norfolk is poised to benefit from strong pricing
momentum on the back of abundant opportunities within the
transportation sector. Growing market share of its Intermodal
segment and an improving Merchandize segment along with recovery in
the construction and agriculture market will likely support the
company's efforts to generate even higher revenues in the coming
However, we remain concerned about the weak performance of the
Coal segment. Further, tightened railroad regulation and
competitive pressure from peers like
) remain as significant headwinds to the company's growth.
Norfolk Southern currently carries a Zacks Rank #2 (Buy).
Other stocks in this sector include
Union Pacific Corporation
), both with the same Zacks Rank #2.
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