Norfolk Southern (NYSE: NSC) is set to announce its Q2 2024 results on July 24, with expectations of slightly surpassing street forecasts for revenue and earnings. Despite a projected increase in year-over-year sales, higher costs may impact its operating ratio. NSC stock is expected to trade higher, with potential for growth as discussed in an interactive dashboard analysis of Norfolk Southern’s Earnings Preview.
In terms of stock performance, NSC has seen minimal change since early 2021, with fluctuations in returns over the last few years. The stock underperformed the S&P 500 in 2021 and 2023, presenting challenges for individual stocks to consistently beat the market. However, the Trefis High Quality Portfolio has outperformed the S&P 500 annually, suggesting a collection of 30 stocks with better returns and lower risk compared to the benchmark index.
Amid the uncertain macroeconomic environment featuring high oil prices and elevated interest rates, there are concerns about NSC facing underperformance like in previous years. From a valuation standpoint, NSC stock shows potential for growth, with an estimated valuation of $263 per share, indicating 15% upside from its current levels. This aligns with the stock’s average P/E ratio over the last four years, projecting a positive outlook for Norfolk Southern.
Reviewing the previous quarter, Norfolk Southern experienced a 4% year-over-year decline in revenue in Q1, mainly due to lower Intermodal revenues. Despite a 4% volume increase, average revenue per carload decreased by 8%, leading to an 89% year-over-year decline in EPS due to increased operating costs, including expenses related to an incident in Ohio.
For the latest quarter, Norfolk Southern is expected to report sales of $3.07 billion, reflecting a 3% year-over-year increase with continued challenges in coal freight pricing. However, growth in fuel surcharge revenue may offset these challenges, although overall costs are likely to remain high, impacting the company’s operating ratio. Earnings are projected to reach $2.90 per share, marking an 86% year-over-year rise.
While NSC stock shows potential for growth, it is essential to consider how Norfolk Southern’s peers are faring in relevant metrics. Peer comparisons can provide valuable insights into the company’s performance in relation to others within the industry. Investors can also explore Trefis Market Beating Portfolios for further investment opportunities based on Trefis price estimates.
