I'm here to remind you that this is entirely out of their hands.
The hauler bested analyst estimates by a couple of pennies per share, but those analysts had good reason to anticipate a rocky quarter. Throughout the period, and indeed all year long, Norfolk Southern has seen its total freight volumes decline to a greater degree than its competitors. Burlington Northern Santa Fe
A surprising 6.2% pricing increase limited Norfolk's revenue decline to 29%, while net earnings took a more severe slide of 42% to land at $303 million. Like its East Coast rival CSX
Norfolk Southern is particularly exposed to the vagaries of the domestic coal market, and the company's 22% decline in coal volumes -- alongside a 35% drop in related revenue -- underscores the persistent weakness that miners like Peabody Energy
As I've stated before, the variable repercussions of this economic downturn are out of the hands of these highly efficient cargo handlers. Readers are advised that these factors are completely independent of the entire group's noteworthy achievements in meeting challenging business conditions with skillfully heightened efficiency.
Norfolk Southern turned in an entirely respectable operating ratio of 72.8% for the quarter, which outshines those of both Burlington Northern and CSX. Going forward, I see the sector steaming towards optimal efficiency as a response to domestic freight demand that has likely to plateau in the near term. Despite their best operational efforts, I find no compelling reason to invest in railroads at this time, but invite you to share your thoughts in the comments section below.
The CAPS community has shared its collective insight on 35 "road and rail" companies. Join the free CAPS community today and share your views on how the rail industry will fare throughout these persistent economic headwinds.
Fool contributor Christopher Barker has never hopped a freight train, but he thinks it would be a fun place to learn the harmonica. He can be found blogging actively and acting Foolishly within the CAPS community under the username TMFSinchiruna. He also tweets. He owns shares of Peabody Energy. Berkshire Hathaway and Canadian National Railway are Motley Fool Stock Advisor picks. Berkshire Hathaway is a Motley Fool Inside Value selection. The Fool owns shares of Berkshire Hathaway. Try any of our Foolish newsletters today, free for 30 days.
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