How Norfolk Southern Stock Has Trended ahead of Its 4Q17 Earnings

Norfolk Southern’s 4Q17 earnings

Norfolk Southern (NSC), an NYSE-listed Eastern US rail transportation company, plans to announce its 4Q17 earnings on January 24, 2018, at 8:45 AM EST. At that time, the company will hold its earnings conference call with securities analysts and institutional investors.

How Norfolk Southern Stock Has Trended ahead of Its 4Q17 Earnings

Has NSC gained from rival’s turnaround plan?

Norfolk Southern gained significantly over rival CSX (CSX) in terms of freight volume growth in 2017. This was due to the latter’s shift toward the operational turnaround plan that was initiated and implemented by the company’s former CEO, Hunter Harrison.

Network issues on the part of CSX may have prompted some of its customers to shift to NSC in mid-2017. Looking at the freight volume data from the Association of American Railroads, that trend becomes more evident.

In another development concerning the US railroad industry, major Western US railroad Union Pacific (UNP) and Kansas City Southern (KSU) warned the Trump administration about the possible consequences of withdrawing from NAFTA.[1. North American Free Trade Agreement] Norfolk Southern, however, declined to comment on the issue.

Norfolk Southern stock price movement

Driving on the US tax reforms, railroads had a good start to 2018, and Norfolk Southern (NSC) was no exception. The railroad has returned 6.3% since the beginning of 2018. Let’s look at the returns of its peer group during the same timeframe:

  • CSX – 4.9%
  • Union Pacific – 4.7%
  • Kansas City Southern – 5.3%
  • Canadian National Railway (CNI) – -2.5%
  • Canadian Pacific – -0.8%
  • Genesee & Wyoming (GWR) – 3.4%

Investors interested in indirect exposure to transportation companies can consider the SPDR S&P Transportation ETF (XTN). Major US railroads make up 12.4% of XTN’s portfolio holdings.

In this series

In this Norfolk Southern’s 4Q17 pre-earnings series, we’ll look at analysts’ revenue and earnings estimates. We’ll also review Wall Street’s recommendations for NSC and its peer group.