Transportation

What Drove Norfolk Southern Earnings Lower

We have another warning in the transportation sector. In March, Kansas City Southern (NYSE: KSU) warned that it would have a weaker-than-expected first quarter due to lower fuel revenues. It appears that Norfolk Southern Corp. (NYSE: NSC) is in that same boat.

Norfolk Southern released updated guidance for its first quarter. Earnings per share (EPS) are now expected to be $1.00, roughly 15% down from the same period in the previous year. At the same time, revenues for the first quarter are expected to be $2.6 billion.

Thomson Reuters had consensus estimates for the first quarter of $1.26 in EPS on $2.67 billion in revenue. In the same period of the previous year, the company posted EPS of $1.17 on $2.69 billion in revenue.

A significant decline in export coal volume continues to put downward pressure on coal shipments. Looking at coal broadly, merchandise saw growth in volumes, but revenues declined due to unfavorable revenue per unit from reduced fuel revenues. In terms of the intermodal category, increased volumes and core pricing gains roughly offset the impact of lower average revenue per unit due to fuel revenue reductions.

Following the weather-related challenges of the first quarter, volumes are expected to rebound in the second quarter, with the exception of coal, which will continue to be pressured, considering the current market dynamics. In the current energy environment, revenues for the year are expected to be less than revenues for 2014.

ALSO READ: 7 Analyst Stocks Under $10 With Massive Upside Calls

According to the company:

The reduction in earnings is primarily due to lower than expected revenues, although certain expense items also affected the comparison. Revenue decreases reflect reductions in fuel surcharge revenue in each of NS’ three commodity groups, continued reductions in coal volumes, and a lower average revenue per unit related to the mix of business. Lower overall expenses were aided by declining fuel expense but hurt by weather and service recovery costs.

Shares of Norfolk Southern were down about 6% at $98.62 in premarket trading Tuesday. The stock has a consensus analyst price target of $113.50 and a 52-week trading range of $91.91 to $117.64.

The #1 Thing to Do Before You Claim Social Security (Sponsor)

Choosing the right (or wrong) time to claim Social Security can dramatically change your retirement. So, before making one of the biggest decisions of your financial life, it’s a smart idea to get an extra set of eyes on your complete financial situation.

A financial advisor can help you decide the right Social Security option for you and your family. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you.

Click here to match with up to 3 financial pros who would be excited to help you optimize your Social Security outcomes.

 

Have questions about retirement or personal finance? Email us at [email protected]!

By emailing your questions to 24/7 Wall St., you agree to have them published anonymously on a673b.bigscoots-temp.com.

By submitting your story, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.