(The following article by Ray Reed was posted on the Roanoke Times website on October 25.)
ROANOKE, Va. — Norfolk Southern Corp. surprised Wall Street on Wednesday with a 38 percent increase in third-quarter earnings and $2.39 billion in revenue driven by demand for rail shipping.
Both figures exceeded analysts’ expectations, and NS stock jumped 10 percent.
The trading day was a mirror image of NS’ earnings report in July, when second-quarter expenses ran high and the results missed expectations. Shares fell more than 8 percent that day.
“We’re running a good railroad, knock on wood,” said Wick Moorman, NS chief executive officer. “At the same time, we’re trying to do everything we can to control expenses.”
Revenue growth of 11 percent came from higher prices based on a rising demand for rail shipments, Moorman said. Fuel surcharges also helped drive the increase.
NS showed revenue gains in all of its segments except automotive, where the Ford downturn has affected the railroad.
The outlook remains strong in all sectors except automotive and possibly lumber, where a housing slowdown may curb shipping, Moorman told analysts.
The railroad’s competitive position against trucking remains strong despite a recent drop in fuel prices, Moorman said, because the truck industry is undersupplied with drivers.
NS’ report also mirrored the rest of the major railroads in North America, all of which averaged a 15 percent third-quarter increase in stock value.
Wednesday’s report sent NS stock to an intraday peak of $55.07, near its 52-week high of $57.71 in April. It closed at $53.73 on the New York Stock Exchange, up $4.93 or 10.1 percent in heavy trading.