How Will Norfolk Southern’s Profitability Grow In The Next Three Years?

-1.50%
Downside
255
Market
251
Trefis
NSC: Norfolk Southern logo
NSC
Norfolk Southern

Norfolk Southern Corp. (NYSE:NSC), the Virginia-based railroad company, has experienced a drop in its profitability over the last few years due to the declining shipments in the coal and commodities markets. However, the reverse of these trends in 2017 enabled the company’s earnings to rebound. This, coupled with the company’s efforts to bring down its operating expenses, enabled it to witness a surge in its profits. Below, we present the breakup of NSC’s divisional EBITDA for 2017 and forecast for 2018 and beyond using our interactive platform.

Norfolk has been rationalizing its work force, improving fuel efficiency through longer train lengths, and reducing its support costs to bring down its operating ratio. Due to its relentless efforts, the company generated $150 million in productivity savings in 2017, on top of $250 million in 2016. This resulted in an operating ratio of 66.7% in the fourth quarter, the eighth consecutive quarter of a decline in the operating ratio.

Relevant Articles
  1. What’s Next For Norfolk Southern Stock After A 21% Fall This Year?
  2. Which Is A Better Railroad Pick – Norfolk Southern Stock Or CSX?
  3. Will Norfolk Southern Stock Rebound To Its Pre-Inflation Shock Highs?
  4. Will Norfolk Southern Stock Trade Higher Post Q1?
  5. Why Did Norfolk Southern Stock Fall 30% Since 2021?
  6. Pick Either Norfolk Southern Stock Or This Travel Company: Both May Offer Similar Returns

Given the impressive results from its cost reduction initiatives, the company aims to deliver productivity gains of $650 million and reduce its operating ratio to less than 65% by 2020 or sooner. We anticipate that the company will be able to achieve its targeted operating ratio, which will boost its profitability in the near term.

Do not agree with our forecast? Create your own forecasts for Norfolk Southern and its EBITDA using our interactive platform.

 

What’s behind Trefis? See How It’s Powering New Collaboration and What-Ifs

For CFOs and Finance Teams | Product, R&D, and Marketing Teams

More Trefis Research

Like our charts? Explore example interactive dashboards and create your own.