(The Associated Press circulated the following on July 28, 2009.)
NEW YORK — Analysts are looking for one thing above all else when railroad Norfolk Southern Corp. reports second-quarter earnings after the market closes Tuesday: a sign that the worst part of the long and deep recession might be over.
Railroads have shown resiliency against most of the recession’s severe effects in recent quarters. They have slashed costs and raised prices to counter the sharp falloff in demand, but they are not immune.
Norfolk Southern’s eastern rival CSX Corp. said earlier this month that its second-quarter earnings fell 20 percent as it collected fewer fuel surcharges and shipments continued to drop. But the results still topped Wall Street’s expectations, and the company suggested that it doesn’t expect shipments to fall more.
That’s a key signal to analysts looking for any signs of a possible, albeit far off, economic recovery. Rail shipping demand is considered a key gauge of broader economic health because so many goods consumers use — everything from cars to coal for electricity and steel — are transferred on the tracks.
Analysts polled by Thomson Reuters predict Norfolk Southern will post a profit of 64 cents per share on $2.05 billion in sales. That compares with a profit of $1.18 per share and revenue of $2.77 billion a year ago.
Dahlman Rose analyst Jason Seidl said in a recent note to clients that although railroads’ second-quarter reports have been mixed so far, a “somewhat upbeat” outlook from some carriers may be giving “a bit of relief to investors who had been bracing for more doom and gloom.”
Shares of Norfolk, Va.-based Norfolk Southern have traded between $26.69 and $75.53 in the past year. They ended Monday at $45.12.