Norfolk Southern Corporation (NSC Quick QuoteNSC - Free Report) reported lackluster second-quarter 2023 results, with both the top and bottom lines missing the Zacks Consensus Estimate. The below-par results naturally disappointed investors, resulting in the stock losing value in early trading.

Quarterly earnings (excluding $1.39 from non-recurring items) of $2.95 per share fell short of the Zacks Consensus Estimate of $3.15 and declined 14.49% year over year. Results were hurt by high costs.

Railway operating revenues were $2,980 million in the quarter under review, lagging the Zacks Consensus Estimate of $3,071.8 million. The top line decreased 8.31% year over year, with all key segments including Merchandise, Intermodal and Coal registering deterioration in revenues. Total revenue per unit dipped 3% year over year. Income from railway operations decreased 55% to $576 million including a charge of $416 million associated with the Eastern Ohio incident.

Railway operating expenses shot up 21% on a year-over-year basis to $2,404 million primarily due to double-digit increase in costs related to materials apart from the cost of Ohio derailment.

Norfolk Southern’s operating ratio (operating expenses as a percentage of revenues) deteriorated to 80.7% in the second quarter from 60.9% in the year-ago quarter due to higher costs. A lower value of the metric is preferable. Our estimate for this key metric was 64.3%.

In the first six months of 2023, NSC paid out dividends worth $615 million and repurchased shares worth $303 million.

Segmental Performance

Merchandise’s revenues declined 1% year over year to $1,826 million. Actual segmental revenues were, however, higher than our estimate of $1,799.3 million. Volumes inched down 1%, whereas revenue per unit was flat year over year.

Revenues from Intermodal plunged 23% year over year to $745 million. Actual segmental revenues were lower than our projection of $868.3 million. While segmental volumes decreased 9%, revenue per unit tumbled 16%.

Coal’s revenues totaled $409 million, down 4% year over year. Actual segmental revenues fell short of our anticipation of $425.8 million. Coal volumes were flat year over year. Revenue per unit fell 4% in the reported quarter.

Liquidity

Norfolk Southern exited second-quarter 2023 with cash and cash equivalents of $556 million compared with $456 million at the end of 2022. NSC had a long-term debt of $14,594 million at the end of the quarter under review compared with $14,479 million at 2022 end.

Currently, Norfolk Southern carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Q2 Performance of Other Transportation Companies

J.B. Hunt Transport Services’ (JBHT Quick QuoteJBHT - Free Report) second-quarter 2023 earnings of $1.81 per share missed the Zacks Consensus Estimate of $1.97 and declined 25.2% year over year.

Total operating revenues of $3,132.6 million also lagged the Zacks Consensus Estimate of $3,347.5 million. The top line fell 18.4% year over year.

The downfall was due to a decline in revenue per load of 24% in Integrated Capacity Solutions, 13% in Intermodal and 21% in Truckload. A 4% decrease in productivity in Dedicated Capacity Solutions added to the woes. Changes in customer rate, freight mix and lower fuel surcharge revenues resulted in this downtick.

Delta Air Lines’ (DAL Quick QuoteDAL - Free Report) second-quarter 2023 earnings (excluding 16 cents from non-recurring items) of $2.68 per share comfortably beat the Zacks Consensus Estimate of $2.42. DAL reported earnings of $1.44 a year ago.

Revenues of $15,578 million beat the Zacks Consensus Estimate of $14,991.6 million.  Total revenues increased 12.69% on a year-over-year basis driven by higher air-travel demand. The adjusted operating margin was 17.1% compared with 11.7% in the prior-year period.