Can Norfolk Southern (NSC) Pull A Surprise In Q3 Earnings?
Zacks Investment Research | Oct 23, 2016 10:31PM ET
Virginia-based Norfolk Southern Corporation (NYSE:NSC) is scheduled to report third-quarter 2016 results on Oct 26, before the market opens.
Last quarter, the company posted a positive earnings surprise of 0.74%. Moreover, the company’s bottom line surpassed the Zacks Consensus Estimate in three of the last four quarters, with an average beat of 9.89%. Let’s see how things are shaping up for this announcement.
Factors at Play this Quarter
We expect Norfolk Southern’s top line to benefit from the inauguration of the expanded Panama canal in June as East Coast ports are anticipated to witness a rise in container traffic. Also, the company’s bottom line should be boosted by its focus on improving productivity by constantly working towards improving its operating ratio.
However, the company’s revenues are likely to be adversely impacted by low coal volumes. At a recent conference, Norfolk Southern mentioned that coal volumes are expected to remain lower in the second half of 2016 than the comparable period in 2015.
Another concern for investors is Norfolk Southern’s high debt levels and the resultant high debt-to-capitalization ratio. Moreover the company faces stiff competition from peers like Union Pacific Corp. (NYSE:UNP) and CSX Corp. (NASDAQ:CSX) .
Earnings Whispers
Our proven model does not conclusively show that Norfolk Southern is likely to beat earnings this quarter. This is because a stock needs to have both a positive Zacks Investment Research
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