Norfolk Southern (NSC) To Post Q3 Earnings: What's In Store?
Zacks Investment Research | Oct 16, 2019 11:51PM ET
Norfolk Southern Corporation (NYSE:NSC) is scheduled to report third-quarter 2019 results on Oct 23, before the market opens.
The Zacks Consensus Estimate for the company’s third-quarter earnings has been revised 6.9% downward in the past 60 days. Given this weak scenario, let’s delve into the factors that might have influenced the company’s quarterly performance.
Persistent weakness in freight volumes is most likely to have affected Norfolk Southern's top line in the soon-to-be-reported quarter. The Cass Freight Shipments Index ’s decline for three successive months in the third quarter bears testimony to this dismal scenario. Notably, the index that measures North American freight volumes and expenditures declined for 10 consecutive months.
Within the Merchandise segment, the automotive sub-group is expected to have performed poorly due to sluggish vehicle production in the United States. Additionally, below-par traffic volumes might get reflected in coal and intermodal volumes. Evidently, the Zacks Consensus Estimate for coal volumes indicates an approximate 14.8% decline from the reported figure in third-quarter 2018. The same for intermodal volumes suggests a 5% decrease from the year-ago reported number.
However, the company’s consistent cost-reduction initiatives should have boosted earnings in the third quarter. With reduced costs, the operating ratio (operating expenses as a percentage of revenues) is expected to have improved as has been the case in the first two quarters of 2019. Lower the value of this key metric, the better.
Norfolk Southern Corporation Price and EPS Surprise
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