Norfolk Southern (NSC) Up 0.8% Since Last Earnings Report: Can It Continue?

Core Viewpoint - Norfolk Southern's Q3 2024 earnings report showed a positive earnings beat, but revenue fell short of expectations, indicating mixed performance ahead of the next earnings release [2][3]. Financial Performance - Q3 2024 earnings per share were $3.25, exceeding the Zacks Consensus Estimate of $3.10, and reflecting a 22.6% year-over-year increase due to lower costs [2]. - Railway operating revenues reached $3.05 billion, slightly below the Zacks Consensus Estimate of $3.09 billion, with a year-over-year increase of 2.7% [2]. - Overall volumes increased by 7%, while total revenue per unit decreased by 4% year over year [3]. Cost Management - Income from railway operations more than doubled to $1.6 billion, while railway operating expenses fell by 34% year over year to $1.45 billion, primarily due to a significant reduction in fuel costs [3]. - The operating ratio improved to 63.4% from 69.1% year over year, indicating better cost management [4]. Segment Performance - Merchandise revenues rose by 3% year over year to $1.86 billion, although below the estimate of $1.9 billion, with volumes and revenue per unit both increasing by 2% [5]. - Intermodal revenues improved by 4% year over year to $763 million, also falling short of projections, with segment volumes up by 9% but revenue per unit down by 5% [5]. - Coal revenues were $427 million, down 2% year over year, but exceeded projections, with coal volumes improving by 11% and revenue per unit declining by 11% [6]. Liquidity and Debt - At the end of Q3, the company had cash and cash equivalents of $975 million, down from $1.56 billion at the end of 2023, with long-term debt decreasing to $16.6 billion from $17.2 billion [7]. Share Repurchase - The company did not engage in any share repurchases during Q3 2024 [8]. Market Sentiment - Recent estimates for the stock have shown a downward trend, indicating a shift in market sentiment [9]. - Norfolk Southern currently holds a Zacks Rank 3 (Hold), suggesting an expectation of in-line returns in the coming months [12]. VGM Scores - The company has an average Growth Score of C, a Momentum Score of D, and a Value Score of D, placing it in the bottom 40% for the value investment strategy [10][11].