Norfolk Southern Q1 Earnings Miss Estimates, Revenue Beat

Norfolk Southern Corporation’s (NSC) first-quarter 2025 earnings of $2.69 per share (excluding 62 cents from non-recurring items) missed the Zacks Consensus Estimate of $2.72. The bottom line, however, increased 8% year over year, owing to lower costs.

Railway operating revenues were $2.99 billion in the quarter under review, almost in line with the Zacks Consensus Estimate. The top line decreased 0.4% year over year.

Norfolk Southern Corporation Price, Consensus and EPS Surprise

Norfolk Southern Corporation price-consensus-eps-surprise-chart | Norfolk Southern Corporation Quote

Overall volumes increased 1% year over year. Total revenue per unit dipped 2% year over year. Income from railway operations rose more than 100% year over year to $1.15 billion.

Railway operating expenses declined 34% on a year-over-year basis to $1.85 billion, primarily due to a double-digit decrease in fuel expenses.

NSC’s president and chief executive officer, Mark George, stated, “The Thoroughbred team once again demonstrated tremendous resilience in the quarter, overcoming a disruptive winter storm season to deliver an improved operating ratio, earnings growth, and a consistent service experience for our customers.”

We note that another player from the Zacks Transportation-Railroad industry, Union Pacific Corporation (UNP), will report its first-quarter earnings numbers later this month. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

UNP is scheduled to report first-quarter 2025 results on April 24, before market open. Weakness pertaining to freight revenues and volumes do not bode well for UNP. Economic uncertainty is also a cause for worry.

UNP’s earnings lagged the Zacks Consensus Estimate once in the preceding four quarters and surpassed the mark in the remaining three quarters, delivering an average rise of 3.35%.

Q1 Segmental Performance of NSC

Merchandise revenues were flat year over year at $1.86 billion. Actual segmental revenues were lower than our estimate of $1.91 billion. Revenue per unit increased 2% year over year.

Revenues from Intermodal rose 2% year over year to $760 million. Actual segmental revenues were lower than our projection of $778.2 million. While segmental volumes increased 3%, revenue per unit tumbled 1% year over year.

Coal revenues were $370 million, down 7% year over year. Actual segmental revenues came ahead of our projection of $347.1 million. Coal volumes fell 1% year over year. Revenue per unit declined 5% in the reported quarter.

Liquidity & Buyback

Norfolk Southern exited the first quarter with cash and cash equivalents of $1.01 billion compared with $1.64 billion at the end of the prior quarter. NSC had a long-term debt of $16.6 billion at the first-quarter end, which was almost flat sequentially.

The company repurchased and retired 1 million shares in the first quarter of 2025 for $250 million.

2025 Guidance

For 2025, NSC expects revenue growth of 3% and 150 bps of year-over-year improvement in the operating ratio. Capital expenditure is expected to be around $2.20 billion in 2025. NSC plans continued execution of share repurchases in 2025.

NSC’s Zacks Rank

Currently, NSC carries a Zacks Rank #4 (Sell).

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

Q1 Performances of Other Transportation Companies

United Airlines

United Airlines’ UAL first-quarter 2025 earnings per share (excluding 25 cents from non-recurring items) of 91 cents surpassed the Zacks Consensus Estimate of 75 cents. In the year-ago quarter, the Chicago-based airline reported a loss of 15 cents per share. 

Operating revenues of $13.21 billion fell marginally short of the Zacks Consensus Estimate of $13.22 billion. The top line increased 5.4% year over year despite the tariff-induced slowdown in domestic air travel demand. Passenger revenues (which accounted for 89.7% of the top line) rose 4.8% to $11.9 billion. The actual figure was short of our passenger revenue estimate of $12.5 billion. UAL flights transported 40,806 passengers in the first quarter, up 3.8% year over year.

CSX

CSX Corporation CSX reported disappointing first-quarter 2025 results, wherein both earnings and revenues lagged the Zacks Consensus Estimate. Quarterly earnings per share of 34 cents missed the Zacks Consensus Estimate of 37 cents and decreased 26% on a year-over-year basis due to lower revenues.

Total revenues of $3.42 million missed the Zacks Consensus Estimate of $3.47 million and declined 7% year over year. The downside was owing to a decline in coal revenues, fuel surcharge, and merchandise volume. This was partially offset by the effects of higher merchandise pricing and growth in intermodal volume.

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

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