Norfolk Southern Corp. (NSC) has been able to leverage its strong pricing power in order to grow its profits, as seen by the company’s recently reported strong second-quarter results. Analyst estimates continue to advance, and this stock is once again pressuring its 52-week high.

Norfolk Southern Corp., through its subsidiaries, operates as a rail shipper specializing in raw materials and finished goods primarily in the United States. The company was founded in 1830, has a market cap. of $27 billion and is headquartered in Norfolk, Virginia.

Strong Second-Quarter Results

Rail shippers continue to be in favor as many companies have struggled with the higher costs associated with traditional trucking. This dynamic was evident when Norfolk reported strong second-quarter results on July 22.

Revenue was up 16% from last year to $2.77 billion. Income totaled $453 million, a 15% increase from last year, producing earnings of $1.18 per share, ahead of analyst expectations of $1.05 per share.

Pricing Power Driving Profits

Norfolk noted that its costs were up 16% in the quarter due to higher energy prices. But the company’s strong pricing power enabled it to pass these expenses on to its customers.

Shipping volumes were down marginally, by about 2%, but Norfolk did experience strong demand from a number of sectors Incorporatedluding the coal, agriculture and metals markets.

A History of Surprising

This is the fourth time in the last four quarters that the company has surprised and beaten analyst estimates, having done so by an average of 7 cents, or 6.64%. In this economic environment it is a testament to the company’s ability to drive its growth and produce gains.

Estimates Continue to Rise

Analyst estimates have been creeping higher for the last 3 months. The current-year estimate now stands at $4.31 per share, up from $4.04 per share 30 days ago and $4.28 per share just 7 days ago. The next-year estimate is projecting 14% earnings growth, with the consensus estimate pegged at $4.91 per share.

Based upon the current-year earnings estimate, this stock carries a forward P/E multiple of 16.4X, a slight premium to the overall market.

The Chart

This stock has been up trending for most of the year, recently hitting a new 52-week and all-time high above $75. Since then, shares have retreated slightly, but are still within striking range of the new high. Some short-term resistance has developed between $73 and $74.

Content Courtesy: Zacks Investment Research

#1 Ranked Stocks Highlight Archive
To truly take advantage of the Zacks Rank, you need to first understand how it works. That is why we created the free special report: Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions.

| Blog Home| VitalStocks Home
View original at: VitalStocks Blog

1. (KSU) – Kansas City Southern – beaten analyst estimates four of four times by an average of 24.2%Kansas City Southern’s (KSU) share price has been in rally mode for the past month,...
2. (PKX) – Posco – Estimates for the year are up 17%in the last 30 days with 3 out of 5 covering analysts raising estimatesPosco makes big profits as steel demand remains strong worldwide and prices continue to rise....
3. (AKS) – AK Steel Holding Corp – surprised and beaten analyst estimates in the last four quarters by an average 22.25%AK Steel Holding Corp.’s (AKS) share price has recently slid lower, but that is not...
4. (CEDC) – Central European Distribution Corp – Estimates continue to revise their earnings estimates upwardCentral European Distribution Corporation (CEDC) shares just broke through a key level of resistance and...
5. (FOE) – Ferro Corp – Consensus Estimates Rise for the Second Quarter and the Full YearFerro Corporation is finding profits overseas as demand for its specialty chemical products stays strong....
6. (UNF) – UniFirst Corp – Analysts Raise Estimates for the Fourth QuarterUniFirst reported a record third quarter as the uniform manufacturing and laundry business remains hot....

Search Posts by Tag: NSC | Railroads | Services

RSS Feeds by Tag: NSC | Railroads | Services |

Other Posts by: Shawn | RSS Feed for this author