Norfolk Southern (NSC) Q3 Earnings Beat, Revenues Fall Y/Y
Norfolk Southern Corporation’s NSC third-quarter 2020 earnings (excluding 29 cents from non-recurring items) of $2.51 per share surpassed the Zacks Consensus Estimate of $2.36. However, the bottom line decreased 2.7% on a year-over-year basis.
Railway operating revenues in the quarter under review came in at $2,506 million, falling short of the Zacks Consensus Estimate of $2,525.8 million. Moreover, the top line declined 11.8% year over year due to 7% drop in total volumes and 5% decline in revenue per unit as a result of the economic slowdown caused by coronavirus.
Income from railway operations (adjusted) dropped 6% year over year to $939 million. Adjusted operating expenses declined 15% on a year-over-year basis to $1,567 million, thanks to low fuel, compensation and benefits, and purchased-services expenses. Norfolk Southern’s adjusted operating ratio (operating expenses as a percentage of revenues) in the third quarter improved to 62.5% from 64.9% in the year-ago period. With respect to this metric, lower the value, the better.
Norfolk Southern Corporation Price, Consensus and EPS Surprise
On a year-over-year basis, coal revenues totaled $250 million, down 38% year over year. Coal volumes contracted 32%. Revenue per unit also declined 8% in the reported quarter.
Merchandise revenues declined 10% to $1,556 million and volumes fell 11%. Revenue per unit improved 1% for the segment.
Intermodal revenues dipped 1% year over year to $700 million. While segmental volumes inched up 1%, revenue per unit slipped 2% on a year-over-year basis.
Liquidity & Share Buyback
This Zacks Rank #3 (Hold) company exited the third quarter with cash and cash equivalents of $1,359 million compared with $580 million at the end of 2019. The company had long-term debt of $12,634 million at the end of the reported quarter compared with $11,880 million at 2019-end.
During the first nine months of 2020, Norfolk Southern repurchased and retired 5.3 million shares at a cost of $960 million.
The company’s board cleared a quarterly cash dividend of 94 cents per share, payable to shareholders on Dec 10 of record as of Nov 6. It paid out dividends for 153 consecutive quarters.
Let’s take a look into some other Zacks Transportation sector companies’ third-quarter earnings.
Southwest Airlines Co. LUV, carrying a Zacks Rank #3, incurred a loss of $1.99 per share (excluding 3 cents from non-recurring items) in the third quarter of 2020, narrower than the Zacks Consensus Estimate of a loss of $2.44. Moreover, operating revenues of $1,793 million surpassed the Zacks Consensus Estimate of $1,678.2 million.
Trinity Industries Inc TRN, carrying a Zacks Rank #2 (Buy), reported third-quarter 2020 earnings (excluding 4 cents from non-recurring items) of 17 cents per share, massively surpassing the Zacks Consensus Estimate of 5 cents. Total revenues of $459.4 million also outperformed the Zacks Consensus Estimate of $443.8 million. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
CSX Corporation CSX, carrying a Zacks Rank of 3, reported third-quarter 2020 earnings of 96 cents per share, surpassing the Zacks Consensus Estimate of 93 cents. However, total revenues of $2,648 million lagged the Zacks Consensus Estimate of $2,704.6 million.
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