Norfolk Southern faces 6.7% revenue decline in Q2 earnings report

Norfolk Southern reports Q2 earnings July 23 with consensus EPS of $3.23, down 1.8% from a year ago.

"The railroad operator has benefited from an uptick in freight market demand and cost-cutting initiatives," Zacks Equity Research said in a note ahead of the results.

The Zacks Consensus Estimate for revenue stands at $3.32 billion, a 6.7% decline from the prior-year quarter. The intermodal segment is expected to post a 5.7% revenue increase, driven by e-commerce demand. The company's Precision Scheduled Railroading operating plan has improved service quality and asset utilization, analysts said.

The earnings report comes as Norfolk Southern seeks to sustain its momentum after beating consensus estimates in each of the past four quarters, with an average beat of 6.45%. In the first quarter, the company posted adjusted EPS of $2.65, topping the $2.51 consensus, while revenue edged up 0.2% to $3.0 billion. The adjusted operating ratio widened to 68.7% from 67.9% a year earlier, reflecting higher costs and fuel headwinds.

The consensus estimate for Q2 EPS has been revised upward by 3.53% over the past 60 days to $3.23, though that still implies a decline from the $3.29 reported a year ago. Norfolk Southern carries a Zacks Rank #3 (Hold) with an Earnings ESP of +0.21%, suggesting a potential beat.

The results will serve as a bellwether for the broader freight and industrial economy in the US. Investors will watch for updates on cost-cutting progress and whether intermodal growth can offset weakness in other segments. The company reports before the market opens on July 23.

This article is for informational purposes only and does not constitute investment advice.