Norfolk Southern Chugs thru Valley

Tags: nsc
25 Nov 3:23am
Posted by ZacksResearch
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We are maintaining our Hold rating on Norfolk Southern Corporation (NSC), but cutting our target price to $45. In its third quarter report, NSC posted EPS of $1.37, well above the consensus of $1.21 and Zacks estimate of $1.17, largely due to better-than-expected revenue growth, particularly in coal where revenues jumped 52%.

Company-wide revenues rose 23% due to a 24% gain in revenue yield, partly offset by a 1% volume decline. We are increasing our diluted EPS estimate on Norfolk Southern Corporation to $4.55 from $4.30 for 2008, but retaining our $4.90 estimate for 2009.

We expect results to benefit from continued strong pricing, though volumes should decrease due to economic weakness. Recent declines in oil prices will help costs, but hurt fuel surcharge revenues. NSC recently increased the dividend 10% to a $1.28 annual rate.

Read the full analyst report on NSC



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