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Strong Liquidity Boosts Norfolk (NSC), High Fuel Costs Ail
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We have recently updated a report on Norfolk Southern Corporation (NSC - Free Report) .
The long-term expected earnings per share (three to five years) growth rate for Norfolk Southern is pegged at 13.5%. The company has an earnings surprise of 7.1%, on average, beating estimates in all of the last four quarters. The stock has gained 21.5% in the past year compared with a 16.2% rally of the industry.
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Norfolk Southern’s liquidity position is encouraging. NSC’s current ratio (a measure of liquidity) at the end of the September quarter stood at 1.13, higher than the June quarter's reading of 1.08. A higher current ratio often implies that the capability of a company to pay its short-term obligations is increasing. In case of an increasing current ratio, the company has a larger proportion of short-term asset value relative to the value of its short-term liabilities.
With economic activities gaining pace, overall volumes rose 8% year over year in the first nine months of 2021, with the metric improving at all three units — coal (up 18%), merchandise (up 7%) and intermodal (up 9%). An improvement in revenues (up 14% in the first nine months of 2021) is driving volumes. Total revenues are now expected to increase at least 12% in 2021 from 2020 levels owing to strong growth in the intermodal and merchandise segments.
An increase in fuel costs due to an uptick in oil price is limiting the bottom line. In third-quarter 2021, expenses on fuel increased 65%, inducing a 10% rise in operating expenses. In the July-September period, oil prices increased 4.1% sequentially. In the first nine months of 2021, Norfolk Southern’s expenses on fuel increased 44% year over year to $399 million.
Investors interested in the broader Zacks Transportation sector can also consider stocks like J.B. Hunt Transport Services, Inc. (JBHT - Free Report) , Landstar System, Inc. (LSTR - Free Report) and C.H. Robinson Worldwide, Inc. (CHRW - Free Report) .
The long-term expected earnings per share (three to five years) growth rate for J.B. Hunt is pegged at 15%. JBHT is benefiting from strong performances across all its segments. While the Dedicated Contract Services (DCS) unit is being aided by fleet-productivity improvement and a rise in average revenue-producing trucks, the Integrated Capacity Solutions (ICS) unit is gaining from favorable customer freight mix as well as higher contractual and spot rates.
JBHT’s measures to reward shareholders are encouraging. Driven by the tailwinds, the stock has increased 44.3% in the past year. J.B. Hunt currently carries a Zacks Rank #2.
The long-term expected earnings per share (three to five years) growth rate for Landstar is pegged at 12%. LSTR is benefitting from a gradual recovery in the economy and freight market conditions in the United States.
LSTR’s top and the bottom line increased substantially in each quarter from third-quarter 2020 levels, owing to robust revenues in the primary segment — truck transportation. LSTR has surged 27% in the past year. Landstar carries a Zacks Rank #2 presently.
The long-term expected earnings per share (three to five years) growth rate for C.H. Robinson is pegged at 9%. CHRW benefits from higher pricing and volumes across most of its service lines. Total revenues jumped 42.4% year over year in the first nine months of 2021, with higher revenues across all the segments.
CHRW’s measures to reward its shareholders are encouraging. Driven by the tailwinds, the stock has moved up 8.2% in the past year. C.H. Robinson currently sports a Zacks Rank #1.
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Strong Liquidity Boosts Norfolk (NSC), High Fuel Costs Ail
We have recently updated a report on Norfolk Southern Corporation (NSC - Free Report) .
The long-term expected earnings per share (three to five years) growth rate for Norfolk Southern is pegged at 13.5%. The company has an earnings surprise of 7.1%, on average, beating estimates in all of the last four quarters. The stock has gained 21.5% in the past year compared with a 16.2% rally of the industry.
Norfolk Southern’s liquidity position is encouraging. NSC’s current ratio (a measure of liquidity) at the end of the September quarter stood at 1.13, higher than the June quarter's reading of 1.08. A higher current ratio often implies that the capability of a company to pay its short-term obligations is increasing. In case of an increasing current ratio, the company has a larger proportion of short-term asset value relative to the value of its short-term liabilities.
With economic activities gaining pace, overall volumes rose 8% year over year in the first nine months of 2021, with the metric improving at all three units — coal (up 18%), merchandise (up 7%) and intermodal (up 9%). An improvement in revenues (up 14% in the first nine months of 2021) is driving volumes. Total revenues are now expected to increase at least 12% in 2021 from 2020 levels owing to strong growth in the intermodal and merchandise segments.
An increase in fuel costs due to an uptick in oil price is limiting the bottom line. In third-quarter 2021, expenses on fuel increased 65%, inducing a 10% rise in operating expenses. In the July-September period, oil prices increased 4.1% sequentially. In the first nine months of 2021, Norfolk Southern’s expenses on fuel increased 44% year over year to $399 million.
Zacks Rank & Other Stocks to Consider
Norfolk Southern currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Investors interested in the broader Zacks Transportation sector can also consider stocks like J.B. Hunt Transport Services, Inc. (JBHT - Free Report) , Landstar System, Inc. (LSTR - Free Report) and C.H. Robinson Worldwide, Inc. (CHRW - Free Report) .
The long-term expected earnings per share (three to five years) growth rate for J.B. Hunt is pegged at 15%. JBHT is benefiting from strong performances across all its segments. While the Dedicated Contract Services (DCS) unit is being aided by fleet-productivity improvement and a rise in average revenue-producing trucks, the Integrated Capacity Solutions (ICS) unit is gaining from favorable customer freight mix as well as higher contractual and spot rates.
JBHT’s measures to reward shareholders are encouraging. Driven by the tailwinds, the stock has increased 44.3% in the past year. J.B. Hunt currently carries a Zacks Rank #2.
The long-term expected earnings per share (three to five years) growth rate for Landstar is pegged at 12%. LSTR is benefitting from a gradual recovery in the economy and freight market conditions in the United States.
LSTR’s top and the bottom line increased substantially in each quarter from third-quarter 2020 levels, owing to robust revenues in the primary segment — truck transportation. LSTR has surged 27% in the past year. Landstar carries a Zacks Rank #2 presently.
The long-term expected earnings per share (three to five years) growth rate for C.H. Robinson is pegged at 9%. CHRW benefits from higher pricing and volumes across most of its service lines. Total revenues jumped 42.4% year over year in the first nine months of 2021, with higher revenues across all the segments.
CHRW’s measures to reward its shareholders are encouraging. Driven by the tailwinds, the stock has moved up 8.2% in the past year. C.H. Robinson currently sports a Zacks Rank #1.