Norfolk Southern (NSC) Q2 Earnings Beat, Decline 43% Y/Y

Norfolk Southern Corporation’s NSC second-quarter 2020 earnings of $1.53 per share surpassed the Zacks Consensus Estimate of $1.39. However, the bottom line plunged 43% on a year-over-year basis.

Railway operating revenues in the quarter under review came in at $2,085 million, edging past the Zacks Consensus Estimate of $2,061.5 million. The top line however declined 29% year over year due to 26% drop in total volumes as a result of the economic downturn caused by coronavirus.

Income from railway operations plunged 43% year over year to $610 million. Operating expenses declined 21% on a year-over-year basis to $1,475 million, thanks to low fuel, compensation and benefits, and purchased services expenses. Norfolk Southern’s operating ratio (operating expenses as a percentage of revenues) in the second quarter deteriorated to 70.7% from 63.6% in the year-ago period. With respect to this metric, lower the value, 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 $209 million, down 55% year over year. Coal volumes contracted 57%. However, revenue per unit inched up 3% in the reported quarter.

Merchandise revenues declined 26% to $1,307 million and volumes fell 29%. Revenue per unit improved 5% for the segment.

Intermodal revenues declined 19% year over year to $569 million. Segmental volumes also decreased 16%. Revenue per unit slipped 4% on a year-over-year basis.

Liquidity & Share Buyback

This Zacks Rank #4 (Sell) company exited the second quarter with cash and cash equivalents of $1,143 million compared with $580 million at the end of 2019. The company had long-term debt of $12,612 million at the end of the reported quarter compared with $11,880 million at 2019-end.

During the first six months of 2020, Norfolk Southern repurchased and retired 3.9 million shares at a cost of $669 million.

Dividend Update

The company’s board cleared a quarterly cash dividend of 94 cents per share, payable to shareholders on Sep 10 of record as of Aug 7.  It paid out dividends for 152 consecutive quarters.

Sectorial Snapshot

Let’s take a look into some other Zacks Transportation sector companies’ second-quarter earnings.

Canadian National’s CNI second-quarter 2020 earnings (excluding 36 cents from non-recurring items) of 92 cents per share (C$0.77) were in line with the Zacks Consensus Estimate. However, the bottom line declined 28.7% year over year. Quarterly revenues of $2,315 million (C$3,209 million) missed the Zacks Consensus Estimate of $2,407.6 million and fell 21.8% year over year. This company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

J.B. Hunt Transport JBHT, carrying a Zacks Rank #3, reported second-quarter earnings of $1.14 per share that surpassed the Zacks Consensus Estimate by 31 cents. Total revenues of $2,145.6 million beat the Zacks Consensus Estimate of $2,060.9 million.

Kansas City Southern’s KSU second-quarter earnings (excluding a penny from non-recurring items) of $1.15 per share beat the Zacks Consensus Estimate of $1.12. This Zacks Rank #3 company’s total revenues of $547.9 million lagged the consensus mark of $550.2 million.

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