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Norfolk Southern Corporation (NSC), headquartered in Atlanta, Georgia, operates a major freight railroad, primarily transporting raw materials, intermediate products, and finished goods across the Southeast, East, and Midwest U.S., with connections to the rest of the country. Valued at a market cap of $54.8 billion, it also handles overseas freight through Atlantic and Gulf Coast ports and offers comprehensive logistics services, including the largest intermodal network on the U.S. East Coast.
Shares of this leading railroad company have underperformed the broader market slightly over the past year. NSC has gained 18.2% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 27.7%. In 2024, NSC stock is up 5.3%, while SPX is up 18% on a YTD basis.
Narrowing the focus, NSC has outpaced the iShares U.S. Transportation ETF (IYT). The exchange-traded fund has gained about 7.8% over the past year and 1.1% on a YTD basis.
On Jul. 25, NSC released its Q2 earnings report, and its stock climbed by 10.9% in the following trading session. Norfolk Southern saw a boost in the second quarter due to insurance payments related to last year's East Palestine derailment while also making strides in reducing expenses and improving efficiency. The company expects to further improve productivity by $550 million over the next two years.
For the current fiscal year, ending in December, analysts expect Norfolk Southern’s EPS to grow marginally annually to $11.80 on a diluted basis. However, the company's earnings surprise history is grim, with NSC missing consensus estimates in three of the last four quarters and surpassing expectations in the most recent quarter.
Among the 23 analysts covering NSC stock, the consensus is a “Moderate Buy.” That’s based on 13 “Strong Buy” ratings, one “Moderate Buys,” eight “Holds,” and one “Strong Sell.”
This configuration is more bullish than two months ago, with 12 analysts suggesting a “Strong Buy.”
On Jul. 29, Benchmark raised its price target for Norfolk Southern from $266 to $270 and maintained a “Buy” rating after the company reported Q2 adjusted EPS of $3.06, exceeding the firm's $2.92 estimate, driven by improvements in service and productivity. The firm believes Norfolk Southern is on track to close the margin gap with its peers over time.
The mean price target of $263.18 represents a 5.7% premium from NSC’s current price levels. The Street-high price target of $292 suggests an upside potential of 17.3%.
On the date of publication, Kritika Sarmah did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
