As you might know, Norfolk Southern Corporation (NYSE:NSC) recently reported its first-quarter numbers. It was a credible result overall, with revenues of US$3.0b and statutory earnings per share of US$0.23 both in line with analyst estimates, showing that Norfolk Southern is executing in line with expectations. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Norfolk Southern after the latest results.
Taking into account the latest results, the most recent consensus for Norfolk Southern from 21 analysts is for revenues of US$12.5b in 2024. If met, it would imply a credible 3.6% increase on its revenue over the past 12 months. Per-share earnings are expected to shoot up 76% to US$11.00. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$12.5b and earnings per share (EPS) of US$9.40 in 2024. There was no real change to the revenue estimates, but the analysts do seem more bullish on earnings, given the substantial gain in earnings per share expectations following these results.
The consensus price target was unchanged at US$270, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Norfolk Southern, with the most bullish analyst valuing it at US$305 and the most bearish at US$233 per share. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The analysts are definitely expecting Norfolk Southern's growth to accelerate, with the forecast 4.9% annualised growth to the end of 2024 ranking favourably alongside historical growth of 3.2% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 7.9% per year. So it's clear that despite the acceleration in growth, Norfolk Southern is expected to grow meaningfully slower than the industry average.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Norfolk Southern's earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Norfolk Southern's revenue is expected to perform worse than the wider industry. The consensus price target held steady at US$270, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Norfolk Southern going out to 2026, and you can see them free on our platform here..
Even so, be aware that Norfolk Southern is showing 4 warning signs in our investment analysis , and 1 of those can't be ignored...
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.