Norfolk Southern (NSC) Q4 Earnings Top, Volumes Rise

Leading U.S. railroad operator Norfolk Southern Corp. (NYSE:NSC) reported fourth-quarter 2017 earnings (excluding $12.10 from non-recurring items) of $1.69 per share, surpassing the Zacks Consensus Estimate of $1.56. The bottom line also expanded 19% on a year-over-year basis. Results were aided by higher revenues.

Railway operating revenues in fourth-quarter 2017 came in at $2,669 million, above the Zacks Consensus Estimate of $2,664.5 million. The bottom line also improved 7% on a year-over-year basis. Overall volumes grew 5% on the back of impressive performances at key segments like coal, merchandise and intermodal.

Income from railway operations (excluding the tax reform related $151 million benefit) climbed 13% year over year to $863 million. Operating expenses decreased 4% year over year to $1.7 billion. Railway operating expenses were reduced by $151 million due to the tax reform.

Markedly, Norfolk Southern revealed that adjusted operating ratio (operating expenses as a percentage of revenues) in the reported quarter improved to 170 basis points (year over year) 67.7% in the fourth quarter of 2017. Adjusted operating ratio came in at 67.4% in 2017, reflecting an improvement of 150 basis points from the 2016 figure.

Norfolk Souther Corporation Price, Consensus and EPS Surprise

Norfolk Souther Corporation Price, Consensus and EPS Surprise | Norfolk Souther Corporation Quote

Segmental Revenues

On a year-over-year basis, coal revenues surged 5.7% to $426 million.

Merchandise revenues increased 4.8% year over year to $1,576 million.

Intermodal revenues rose 14.5% year over year to $667 million.

Liquidity

This Zacks Rank #3 (Hold) exited 2017 with cash and cash equivalents of $690 million compared with $956 million at the end of 2016. The company, which aims to invest $1.8 billion in 2018 pertaining to safety of its rail network among other things, had long-term debt of $9,136 million compared with $9,562 million at the end of 2016. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Dividend Hiked by 18%

In a shareholder-friendly move, Norfolk Southern's board of directors cleared an increase in its quarterly dividend to 72 cents per share (annualized $2.88 per share) from 61 cents per share (annualized $2.44 per share). The first instalment of the new dividend is payable Mar 10, to shareholders of record on Feb. 2. The company has an impressive record with respect to dividends. It has paid dividends for 142 consecutive quarters, since inception in 1982.

Upcoming Releases

Investors interested in the broader Transportation sector keenly await fourth-quarter earnings reports from the key players like American Airlines Group, Inc. (NASDAQ:AAL) , Southwest Airlines Company (NYSE:LUV) and Union Pacific Corporation (NYSE:UNP) , all scheduled to report respective earnings numbers on Jan 25.

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