The railroad sector has been giving committed value investors -- at least those who use free cash flow as their primary criteria -- a bit of a headache. See, everybody seems to like the railroads these days, and just about every one of the rail companies is doing better, but it's tough to reconcile today's investor enthusiasm with long-term value. Nevertheless, let's take a look at the last major U.S. railroad to report earnings -- NorfolkSouthern (NYSE:NSC).

Maybe this is a case of saving the best for last. Norfolk Southern's railway revenue climbed 16% in the quarter as the company combined decent volume growth (at least compared with other railroaders) with solid low-teens growth in yield. That yield, in turn, is a product of both good fuel cost recovery and price hikes from earlier in the year.

Revenue wasn't the only good news, though: Operating expenses were up 12%, and the operating ratio improved to 73.7. As you might expect, fuel costs were a brutal factor this quarter (up 64%), though other expenses were pretty well controlled.

Looking on a more line-by-line basis, we see strong mid-teens yield growth in merchandise and coal hauling and high single-digit growth in intermodal. So while volumes were a bit flattish outside of intermodal (and down in coal and automobiles), the overall picture comes out all right.

What I find interesting about Norfolk Southern is some of the fears in play about it. The company is more reliant on the auto sector than any other Class 1 operator, but a fair bit of what the company loses from Ford (NYSE:F) and General Motors (NYSE:GM) could be recouped from Honda (NYSE:HMC), Toyota (NYSE:TM), and DaimlerChrysler (NYSE:DCX). Likewise with coal -- yes, Powder River Basin coal is going to become more and more significant, but it's not as if the eastern mines that Norfolk Southern serves are going to be abandoned in a year or two.

Last and not least, I'm a bit intrigued that Norfolk Southern doesn't look quite as expensive as the other rails. I'm not saying it's cheap or that it's a bargain, but it does seem a little more reasonably priced. That may at least merit further due diligence for Fools not put off by the longer-term growth concerns.

For more related railroad Takes:

Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).