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With a market cap of $56.5 billion, Atlanta, Georgia-based Norfolk Southern Corporation (NSC) is a leading player in the rail transportation sector. The company specializes in transporting a diverse range of goods and provides extensive logistics services through key Atlantic and Gulf Coast ports.
Companies valued at $10 billion or more are generally considered “large-cap” stocks, and Norfolk Southern fits this criterion perfectly. Norfolk Southern is renowned for its dominance in the Eastern U.S. freight rail market, operating the largest intermodal network in the region, pioneering Roadrailer service, and managing 28,400 miles of track while maintaining a duopoly with CSX Transportation on transcontinental freight rail lines.
The railroad operator pulled back 5.2% from its 52-week high of $263.66, achieved in March. Despite this, over the past three months, shares of Norfolk Southern have seen a more pronounced gain of 11.3%, in contrast to The Industrial Select Sector SPDR Fund’s (XLI) rise of 3% during the same timeframe.
Nevertheless, over the longer term, NSC's YTD rise of 5.8% trails behind XLI’s 10.4% climb. Yet, Norfolk Southern has made a significant leap of 26% over the past 52 weeks, outpacing XLI’s 18.2% gain over the same time frame.
NSC has stayed above its 50-day and 200-day moving averages since late July, signaling a bullish trend.
Norfolk Southern has outperformed over the past year due to robust pricing strategies and increased revenue per carload, bolstered by higher fuel surcharges. Additionally, the company's ability to recover from the Ohio derailment incident and effectively manage operational costs has contributed to its strong performance.
Moreover, the stock took off more than 10% following its better-than-expected Q2 earnings result on Jul. 25, with adjusted EPS of $3.06 and revenue of $3 billion. The strong performance was bolstered by robust pricing and improved intermodal volumes, along with a 160 basis point improvement in the adjusted operating ratio to 65.1%, showcasing enhanced cost management.
Also, NSC surged ahead of its rival Canadian Pacific Kansas City Limited (CP), which has gained nearly 6% over the past 52 weeks and a 4.8% rise on a YTD basis, highlighting Norfolk Southern Corporation's stock outperformance.
But despite the stock’s outperformance over the past year, analysts are cautiously optimistic about its prospects. The stock has a consensus rating of “Moderate Buy” from the 23 analysts covering the stock, and the mean price target of $263.18 suggests a premium of only 5.3% to current levels.
On the date of publication, Sohini Mondal 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.
