Norfolk Southern Sees -14% Drop in Profit in Q4; Exceeds Wall Street Estimates (NSC)

Norfolk Southern Sees -14% Drop in Profit in Q4; Exceeds Wall Street Estimates (NSC)


Railroad transporter Norfolk Southern Corp. (NSC) released its fourth quarter earnings report after hours on Tuesday, posting a significant decline in net income due to poor coal shipments.

The Norfolk, Virginia-based company posted a fourth quarter profit of $413 million, or $1.30 per share, down -14% from $480 million, or $1.42 per share, earned a year earlier. Despite the steep drop, earnings still beat Wall Street views; analysts were expecting an EPS of $1.19.

Norfolk Southern fourth quarter revenue came in at $2.68 billion, down -4% from $2.8 billion in the same period a year earlier. According to FactSet, analysts expected revenue to be $2.67 billion.

Full year 2012 net income declined -9% to $1.75 billion, or $5.37 per share, from $1.9 billion, or $5.45 per share, earned in 2011. Revenue was $11 billion, down from $11.2 billion in 2011.

The company’s poor earnings are a result of a continuing weak coal demand; executives say it is very difficult to estimate when coal shipments will increase. Partly because of the coal demand uncertainty, NSC is planning to reduce its capital spending by 10% in 2013.

Norfolk Southern shares were down slightly during pre-market trading on Wednesday. The stock is down -13.36% over the past year.

The Bottom Line
Shares of Norfolk Southern (NSC) have a 2.99% dividend yield, based on last night’s closing stock price of $66.94. The stock has technical support in the $61-$64 price area. If the shares can firm up, we see overhead resistance around the $68-$70 price levels.

Norfolk Southern Corp. (NSC) is not recommended at this time, holding a DARS™ Rating of 3.3 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.

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