Norfolk Southern (NSC) Q3 Earnings Beat, Revenues Fall Y/Y

Zacks Equity Research
·4-min read

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

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 $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.

Dividend Update

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.

Sectorial Snapshot

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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