NEW YORK (TheStreet) -- Shares of Norfolk Southern (NSC) - Get Report are up 0.57% to $70.27 in afternoon trading on Thursday after the company announced that it will cut about 2,000 jobs, or 4% of its workforce, by 2020.
Norfolk Southern will cut about 1,200 jobs by the end of this year with the remaining job cuts to be spread out over the next five years.
"We have the right team and the right plan to address the current headwinds and deliver superior value as we move through 2016 and beyond," said CEO Jim Squires.
The cuts will save the company about $130 million in 2016 with savings expected to increase to more than $650 million annually by 2020.
"This plan will enable us to achieve significant annual expense savings beginning in 2016 without compromising the company's ability to capitalize on volume and revenue growth opportunities," Squires said. "We are making progress despite a challenging operating environment."
The Norfolk, VA-based freight rail company announced the plans after it reported that its fourth quarter profit fell 29% due to a 6% decline in the amount of freight it delivered.
The company reported net income of $361 million, or $1.20 per share, -- a decline from the $511 million it earned in the year ago period -- missing analysts $1.28 per share expectations. Fourth quarter revenue fell 12% year over year to $2.52 billion, also missing analysts' $2.59 billion guidance.
While the stock is gaining today on the news of the job cuts, TheStreet sees more trouble ahead for the company.
TheStreet Ratings downgraded the stock to "hold" from "buy" while also lowering the company's letter grade to C from B. TheStreet identified multiple strengths in the company including good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, it also found weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity.
TheStreet Ratings uses an algorithmic model to determine a rating for risk-adjusted total return prospect over 12 months.