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Norfolk Southern (NSC) to Post Q4 Earnings: Is a Beat Likely?

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Norfolk Southern Corporation NSC is scheduled to report fourth-quarter 2021 results on Jan 26, before market open.

NSC has an excellent record with respect to the bottom line, outpacing the Zacks Consensus Estimate in each of the last four quarters, the average being 7.05%.

Norfolk Southern Corporation Price and EPS Surprise

Norfolk Southern Corporation Price and EPS Surprise
Norfolk Southern Corporation Price and EPS Surprise

Norfolk Southern Corporation price-eps-surprise | Norfolk Southern Corporation Quote

The Zacks Consensus Estimate for Norfolk Southern’s December-quarter earnings is currently pegged at $3.04, indicating a 1.9% downward revision over the past 30 days.

Against this backdrop, let’s discuss the factors that might have impacted Norfolk Southern’s performance in the December quarter.

Echoing the third-quarter scenario of 2021, supply-chain disruptions and labor shortages are likely to have eroded volumes at Norfolk Southern in the December quarter. The Zacks Consensus Estimate for fourth-quarter 2021 overall volumes indicates a 1.6% and 2.7% decline each from the respective reported levels of third-quarter 2021 and fourth-quarter 2020.

The Zacks Consensus Estimate for merchandise and coal volumes indicates a 3.5% and 1.2% decrease each from the corresponding September-quarter’s reported levels. Moreover, an increase in fuel expenses is likely to have hurt this railroad entity’s fourth-quarter bottom line.

However, despite the supply-chain woes, overall revenues are likely to have improved year over year at Norfolk Southern in fourth-quarter 2021 owing to better freight conditions. The Zacks Consensus Estimate for coal, intermodal and merchandise revenues indicates a 15.2%, 11.5% and 8.5% increase from the year-ago quarter’s reported levels, respectively.

Mainly owing to higher revenues, the operating ratio (operating expenses as a percentage of revenues) is likely to have improved year over year. The Zacks Consensus Estimate for fourth-quarter 2021 operating ratio is currently pegged at 60%, suggesting an improvement from the year-ago reported figure of 62%. Lower the value of the metric the better.

Movement of the Consensus Estimate

Due to supply-chain woes primarily, the Zacks Consensus Estimate for Norfolk Southern’s December-quarter earnings has been revised 1.9% downward over the past 30 days to $3.04. The conservative nature of the Zacks Consensus Estimate makes us believe that an earnings beat might not be too difficult for Norfolk Southern this time around.

What Does the Zacks Model Say?

The proven Zacks model predicts a bottom-line outperformance for Norfolk Southern this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings surprise, which is the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: Norfolk Southern has an Earnings ESP of +0.16. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: NSC carries a Zacks Rank #3, currently.

Highlights of Q3 Earnings

Norfolk Southern's earnings of $3.06 per share surpassed the Zacks Consensus Estimate of $2.89. Moreover, the bottom line improved 21.9% year over year despite supply-chain disruptions.

Railway operating revenues in the quarter under review came in at $2,852 million, outperforming the Zacks Consensus Estimate of $2,739.6 million. The top line bettered 13.8% year over year owing to a 14% increase in revenue per unit. Total volumes were flat year over year.

Other Stocks to Consider

Investors interested in the broader Transportation sector may also consider Landstar System LSTR, Expeditors International of Washington EXPD and ArcBest Corporation ARCB as these stocks also possess the right combination of elements to beat on earnings this reporting cycle.

Landstar System has an Earnings ESP of +1.56% and is Zacks #3 Ranked, presently. LSTR will release fourth-quarter 2021 results on Jan 26.

Landstar’s fourth-quarter results are expected to be aided by an improved freight scenario in the United States. Higher truck rates owing to tight truck capacity should aid the December-quarter performance.

Expeditors currently has an earnings ESP of +2.97% and a Zacks Rank #1. EXPD will release fourth-quarter 2021 results on Feb 22.

Expeditors is being bolstered by upbeat airfreight revenues. Like the first three quarters of 2021, we expect airfreight revenues to aid Expeditors’ fourth-quarter 2021 results.

ArcBest has an Earnings ESP of +2.56% and is currently a #2 Ranked player. ARCB will release fourth-quarter 2021 results on Feb 2.

Improving freight conditions in the United States are likely to have aided ArcBest’s fourth-quarter performance. Solid customer demand and higher market rates are also likely to have supported results.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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Norfolk Southern Corporation (NSC) : Free Stock Analysis Report

Expeditors International of Washington, Inc. (EXPD) : Free Stock Analysis Report

ArcBest Corporation (ARCB) : Free Stock Analysis Report

Landstar System, Inc. (LSTR) : Free Stock Analysis Report

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