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Norfolk Southern Up 3% on Bullish Long-Term Financial Goals

Zacks Equity Research

Norfolk Southern Corporation NSC has provided a bullish outlook, both for 2019 and the long-term at the Investor and Financial Analyst Conference held yesterday. Following the upbeat financial projections, shares of the company gained 3.2% at the close of business on Feb 11.

The company focuses on increasing productivity, efficiency and revenue growth as it implements the precision scheduled railroading model. With increased efficiencies and reduced costs from the precision scheduled railroading model, the company predicts operating ratio (operating expenses as a percentage of revenues) to improve at least 100 basis points in the current year compared with 65.4% achieved in 2018.

Additionally, the company aims for a full-year operating ratio of 60% by 2021. Further, revenues are anticipated to grow at a compound annual growth rate of 5% through 2021.

As part of its efforts to promote safety, efficiency and growth, Norfolk Southern expects capital expenditures between 16% and 18% of revenues through 2021.

Norfolk Southern Corporation Price

 

Norfolk Southern Corporation Price | Norfolk Southern Corporation Quote


This Zacks Rank #3 (Hold) company put forward its commitment to raise shareholder value through consistent share buybacks and aims for a dividend payout ratio of 33%. Evidently, the company returned more than $3.6 billion to shareholders in 2018 through dividends ($844 million) and repurchases ($2,781 million). Moreover, this January, it increased its quarterly dividend by 7.5% to 86 cents a share. Notably, this dividend marks the third dividend hike by the company in the last 10 months. During the first quarter of 2018, the company increased its dividend by 18% to 72 cents a share. This amount was further raised 11% last July. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

We remind investors that notable industry players like Canadian Pacific Railway Limited CP, CSX Corporation CSX and Canadian National Railway Company CNI are already reaping benefits from the precision scheduled railroading model with steadily improving operating ratios.

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