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Norfolk Southern (NSC) Beats on Q4 Earnings, Hikes Dividend

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Zacks Equity Research
·4 min read
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Norfolk Southern Corporation’s NSC fourth-quarter 2020 earnings of $2.64 per share surpassed the Zacks Consensus Estimate of $2.48. Moreover, the bottom line improved 3.5% on a year-over-year basis on lower costs.

The company’s railway operating revenues in the quarter under review came in at $2,573 million, outpacing the Zacks Consensus Estimate of $2,556.4 million. However, the top line declined 4.4% year over year due to 1% dip in total volumes and a 3% decline in revenue per unit. Unfavorable business mix as a result of the coronavirus-led economic slowdown and low fuel surcharges also hurt the top line.

Income from railway operations increased 2% year over year to $984 million. Railway operating expenses fell 8% on a year-over-year basis to $1,589 million, courtesy of low fuel costs, compensation and benefits, and purchased-services expenses. Norfolk Southern’s operating ratio (operating expenses as a percentage of revenues) in the fourth quarter improved to 61.8% from 64.2% in the year-ago period owing to reduced operating expenses. 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 $290 million, down 20% year over year. Coal volumes contracted 25%. Revenue per unit, however, increased 6% in the reported quarter.

Merchandise revenues slid 5% to $1,553 million while volumes also fell 5%. Revenue per unit was flat year over year for the segment.

Intermodal revenues inched up 5% year over year to $730 million. While segmental volumes rose 5%, revenue per unit slipped 1% on a year-over-year basis.

Liquidity

This currently Zacks Rank #3 (Hold) company exited the fourth quarter with cash and cash equivalents of $1,115 million compared with $580 million at the end of 2019. The company had long-term debt of $12,102 million at the end of the reported quarter compared with $11,880 million at 2019 end.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Dividend Hike

This railroad operator’s board of directors approved a 5% hike in its quarterly dividend on the company's common stock from 94 cents to 99 cents per share. In another shareholder-friendly announcement, the company raised its long-term dividend payout ratio target from 33% of net income to the 35-40% range.

How Other Railroads Fared

Let’s take a look at some of the other recently released earnings reports from companies within the Zacks Transportation – Rail industry.

CSX Corporation's CSX fourth-quarter 2020 earnings (excluding 5 cents from non-recurring items) of $1.04 per share surpassed the Zacks Consensus Estimate of $1. The bottom line also improved 5.1% year over year due on an encouraging performance of the intermodal segment. Total revenues of $2,825 million outperformed the Zacks Consensus Estimate of $2,747.5 million.

Union Pacific Corporation’s UNP fourth-quarter 2020 earnings (excluding 31 cents from non-recurring items) of $2.36 per share beat the Zacks Consensus Estimate of $2.25. Moreover, the bottom line improved 16.8% on a year-over-year basis. Operating revenues of $5,141 million also marginally beat the Zacks Consensus Estimate.

Kansas City Southern’s KSU fourth-quarter 2020 earnings (excluding 9 cents from non-recurring items) of $1.89 per share missed the Zacks Consensus Estimate of $1.91. However, the bottom line inched up 3.9% year over year, driven by lower costs. Meanwhile, quarterly revenues of $693.4 million lagged the Zacks Consensus Estimate of $700.6 million.

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Union Pacific Corporation (UNP) : Free Stock Analysis Report

Kansas City Southern (KSU) : Free Stock Analysis Report

CSX Corporation (CSX) : Free Stock Analysis Report

Norfolk Southern Corporation (NSC) : Free Stock Analysis Report

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