NEW YORK (TheStreet) -- Shares of Norfolk Southern (NSC - Get Report) were falling 3.6% to $101.09 after-hours Monday after the railroad company announced its first quarter guidance.

Norfolk Southern said it expects to report earnings of $1 a share for the first quarter, a 15% decreased from the year-ago quarter. The company expects to report revenues of about $2.6 billion for the first quarter, down 5% from the year-ago quarter.

Analysts surveyed by FactSet expect Norfolk Southern to report earnings of $1.26 and revenue of $2.67 billion for the first quarter.

Norfolk Southern said the lower earnings are a result of lower revenues for the quarter. The company said that coal shipments experiences downward pressure in the quarter. While merchandise increased in volume in the quarter, the company said that revenue per unit declines due to reduced fuel revenue and changes to the mix of traffic.

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 largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, expanding profit margins and increase in stock price during the past year. 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:

  • The debt-to-equity ratio is somewhat low, currently at 0.75, 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 reported flat earnings per share in the most recent quarter. 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 $6.39 versus $6.04 in the prior year. This year, the market expects an improvement in earnings ($6.69 versus $6.39).
  • 39.41% is the gross profit margin for NORFOLK SOUTHERN CORP which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 17.80% trails the industry average.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • You can view the full analysis from the report here: NSC Ratings Report
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