Norfolk Southern Corporation

Norfolk Southern Corporation delivered strong results in the quarter with revenues in accordance with analyst expectations and managed an earnings beat. Adjusted operating expenses increased by $204 million due to inflation and rising service-related costs. Purchase service growth is influenced by inflation, but it is also influenced by technological investments, such as projects targeted at boosting efficiency, operational executability, and safety. The management began implementing improvements, which had a considerable short-term impact on velocity and railway performance. However, these improvements boosted the company’s network’s reliability and made it even more productive. In locomotives, they kept locomotive velocity substantially above the previous year’s levels. The overall Train & Engine worker productivity measure is lower than last year due to an increased pipeline of conductor trainees and the need to maintain capacity in support of current and future expansion. Furthermore, the company’s modernized locomotive fleet and fuel economy initiatives resulted in a quarter of significant fuel productivity. They intend to invest in this sector over the long term. We give Norfolk Southern Corporation a ‘Hold’ rating with a revised target price.