Why Norfolk Southern (NSC) Stock Is Declining Today

NEW YORK (TheStreet) -- Norfolk Southern (NSC) shares are down -0.7% to $106.89 on Wednesday after its CEO told analysts that proposed rule changes limiting crude carrying train speeds to between 25 mph and 30 mph would be "extraordinarily disruptive" to the entire industry.

The U.S. Transportation Department is considering the new speed limits in an effort to improve safety.

"We will have compelling evidence that any significant speed restriction would be in fact disruptive to the point of almost shutting down the North American rail network," said CEO Charles Moorman.

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TheStreet Ratings team rates NORFOLK SOUTHERN CORP as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate NORFOLK SOUTHERN CORP (NSC) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to its closing price of one year ago, NSC's share price has jumped by 36.49%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, NSC should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The debt-to-equity ratio is somewhat low, currently at 0.80, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.14, which illustrates the ability to avoid short-term cash problems.
  • NORFOLK SOUTHERN CORP's earnings per share declined by 17.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, NORFOLK SOUTHERN CORP increased its bottom line by earning $6.04 versus $5.37 in the prior year. This year, the market expects an improvement in earnings ($6.36 versus $6.04).
  • NSC, with its decline in revenue, slightly underperformed the industry average of 7.9%. Since the same quarter one year prior, revenues slightly dropped by 1.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • You can view the full analysis from the report here: NSC Ratings Report
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