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Norfolk Southern Corporation (NSC), headquartered in Atlanta, Georgia, engages in the rail transportation of raw materials, intermediate products, and finished goods. Valued at $53.04 billion by market cap, the company delivers more than 7 million carloads annually, from agriculture to consumer goods. NSC originates more automotive traffic than any other Class I Railroad, with connections to every major container port on the Atlantic coast as well as major ports in the Gulf of Mexico and Great Lakes. The leading rail transport services provider is expected to announce its fiscal second-quarter earnings for 2024 after the market closes on Thursday, Jul. 25.
Ahead of the event, analysts expect NSC to report a profit of $2.86 per share on a diluted basis, down 3.1% from $2.95 per share in the year-ago quarter. The company has missed Wall Street’s EPS estimates in its last four quarterly reports.
For fiscal 2024, analysts expect NSC to report EPS of $11.65, down marginally from $11.74 in fiscal 2023.
NSC stock has underperformed the S&P 500’s ($SPX) 17.2% gains on a YTD basis, with shares down marginally during this period. Similarly, it underperformed the S&P 500 Industrial Sector SPDR’s (XLI) 11% gains over the same time frame.
On Jun. 25, NSC shares closed down more than 2% after Susquehanna Financial cut its price target on the stock from $265 to $245.
On May 9, NSC shares closed down more than 2% after shareholders voted to elect 10 of the company’s 13 director nominees, including Chief Executive Alan Shaw. Activist investor Ancora Holdings Group had attempted to gain control of NSC’s board, but only three of its seven nominees gained seats on the 13-member board.
NSC’s overall underperformance can be attributed to its underwhelming Q1 results and its $600 million settlement after the devastating derailment that occurred in East Palestine, Ohio, in February last year. On Apr. 24, NSC reported its Q1 results, with its adjusted EPS coming in at $2.49, falling short of the consensus estimates of $2.58. Its revenue of $3 billion missed Wall Street forecasts of $3.03 billion. The company will pay $310 million to settle charges over last year’s derailment and a $15 million fine for alleged violations of the Clean Water Act as part of the federal settlement.
NSC is estimated to have spent approximately $1.7 billion in total costs related to the accident. NSC shares closed down more than 3% on the day the results were released and have been on a downtrend since then.
Analysts’ consensus opinion on NSC stock is bullish, with a “Moderate Buy” rating overall. Out of 22 analysts covering the stock, 12 advise a “Strong Buy” rating, one has a “Moderate Buy” rating, eight recommend a “Hold” rating, and one gives a “Strong Sell.” The average analyst price target for NSC is $259.85, indicating a 10.8% potential upside from the current levels.
On the date of publication, Dipanjan Banchur did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
