Here's Why Investors Should Give Norfolk Southern Stock a Miss Now

Norfolk Southern NSC is facing mounting pressure from uncertainties in the economic environment and weak liquidity. Tariff-related woes are also hurting the company’s prospects, making it an unattractive choice for investors’ portfolios.

NSC: Key Risks to Watch

Southward Earnings Estimate Revision: The Zacks Consensus Estimate for the current-quarter earnings has been revised 3.2% downward over the past 60 days and is pegged at $3.31 per share. Meanwhile, the Zacks Consensus Estimate for 2025 earnings stands at $12.60 per share, indicating a 0.79% fall over the past 60 days.

The unfavorable estimate revision indicates brokers’ lack of confidence in the stock.

Dim Price Performance: The company’s price trend reveals that its shares have declined 3.4% over the past 30 days compared with the Transportation - Rail industry’s 3.3% fall.

Weak Zacks Rank: NSC currently carries a Zacks Rank #4 (Sell).

Bearish Industry Rank: The industry to which Norfolk Southern belongs currently has a Zacks Industry Rank of 175 (out of 245). Such an unfavorable rank places it in the bottom 29% of Zacks Industries.Studies show that 50% of a stock price movement is directly related to the performance of the industry group it belongs to.

A mediocre stock within a strong group is likely to outclass a robust stock in a weak industry. Reckoning the industry’s performance becomes imperative in this case.

Headwinds: Norfolk Southern is facing ongoing challenges in maintaining stable liquidity, as evidenced by its consistently weak and fluctuating current ratio, a key measure of a company’s ability to meet short-term obligations. The ratio declined from 0.86 in 2021 to a low of 0.76 in 2022. Although there was a temporary rebound to 1.24 in 2023, liquidity weakened again, falling to 0.90 in 2024 and further to 0.78 in the first quarter of 2025. As of the second quarter of 2025, the current ratio stood at 0.79. With values persistently below 1, NSC may face growing pressure on its near-term financial flexibility and capacity to meet short-term liabilities.

Moreover, companies like NSC, along with many others across the United States, are navigating a volatile macro environment marked by economic uncertainty, shifting tariff regulations and geopolitical tensions. This complexity is forcing firms to delay investments, revise forecasts and adapt quickly to remain competitive while managing rising compliance and operational risks.

Further,the ongoing tariff-related issues are expected to weigh on performance throughout the year, potentially disrupting trade flows and impacting freight demand. These combined factors could hinder Norfolk Southern’s operational efficiency in the near term.

Stocks to Consider

Investors interested in the Transportation sector may consider LATAM Airlines Group LTM and SkyWest SKYW.

LTM currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

LTM has an expected earnings growth rate of 45% for the current year. The company has a mixed earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in two of the trailing four quarters, missed once and met in the remaining one, delivering an average beat of 4.04%.

SKYW currently sports a Zacks Rank #1.

SkyWest has an expected earnings growth rate of 28.06% for the current year. The company has an encouraging earnings surprise history. Its earnings topped the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average beat of 21.92%.

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This article originally published on Zacks Investment Research (zacks.com).

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