Shares of Norfolk Southern surged 6.43% in pre-market trading on Thursday, driven by the company's second-quarter earnings report which exceeded Wall Street expectations on both profit and revenue.
The Atlanta-based railroad reported adjusted earnings per share of $3.52, surpassing the consensus estimate of $3.31. Railway operating revenue rose 11% to $3.5 billion, also beating analyst forecasts of $3.37 billion. The strong results were attributed to robust freight demand, a 4% increase in volume, and higher fuel surcharges billed to customers, which helped offset persistent fuel-cost pressures.
Additionally, the earnings beat was supported by positive developments in the industry, as peer Union Pacific also reported strong quarterly results. Furthermore, Union Pacific reached a settlement agreement with Canadian National Railway, giving CN expanded Midwest access in exchange for dropping its opposition to Union Pacific’s proposed $71.5 billion merger with Norfolk Southern, which may alleviate some regulatory concerns surrounding the deal.
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