Source: Norfolk Southern.

Even in the midst of some powerful positive trends for railroads, Norfolk Southern (NYSE:NSC) has pulled back from its highs over the past couple of months, as investors became nervous about the railroad company's ability to sustain growth. In light of Norfolk Southern's release of fourth-quarter financial results on Monday morning, those investor concerns appear justified, as the company wasn't able to match rival CSX's performance and instead saw growth come to a standstill. Let's take a closer look at Norfolk Southern's results to see whether the railroad has what it takes to reverse this troubling trend and get moving faster down the tracks in 2015.

Why Norfolk Southern is seeing a slowdown 
Looking at Norfolk Southern's headline numbers for the quarter, total revenue inched downward by 0.4% to $2.87 billion, which was quite a bit less than the $2.94 billion that most investors had expected the railroad to provide. That figure would have represented a 2% growth rate, which while slow would nevertheless have been a move in the right direction. Yet earnings were also stagnant, coming in flat compared to year-earlier levels at $1.64 per share despite beating analyst consensus figures by a penny.

The biggest obstacle to Norfolk Southern's growth came from its coal segment. Coal revenue plunged more than 15% to $543 million, closing a terrible year for coal in which Norfolk Southern saw its annual top line from coal drop more than 6%. Weak demand from utilities and reduced coal exports cut volume by 6% in a weak pricing environment. By contrast, both the railroad's intermodal and general-merchandise categories saw gains, although 3.5% to 5% growth for the segments wasn't enough to offset the downward influence of coal's woes.

Source: Norfolk Southern.

Moreover, even with the strong general-merchandise segment, there were pockets of weakness. Chemicals performed strongly, with sales up 11%, and metals and construction also posted 5% growth. But automotive-related revenue was flat, and agriculture and paper-and-forest materials both fell slightly during the quarter.

Some silver linings for Norfolk Southern?
Not all the news for Norfolk Southern was bad, though. On the expense side, Norfolk Southern did experience continuing cost savings that helped salvage the quarter. Fuel costs fell 14%, saving the company $56 million compared to last year's fourth quarter, and labor-related costs also fell more than 6%.

Norfolk Southern also continued to see some encouraging moves that show its long-term efforts to improve efficiency are paying off. Operating income climbed to a new record high for the fourth quarter, and Norfolk Southern's operating ratio fell to 69%, below the key 70% level and extending the railroad's trend toward optimal operational productivity. The operating ratio of 69.2% for the full 2014 year was a company record.

CEO Wick Moorman. Source: Norfolk Southern.

Overall, CEO Wick Moorman emphasized the full-year hurdles that Norfolk Southern overcame, with record results in 2014 for overall revenue, earnings per share, and operating and net income, as well as operating ratio. Moorman expects to take further steps this year to "maintain the safety and quality of our rail network, enhance service, improve operational efficiency, and support growth opportunities."

Looking forward, one key question will be how quickly Norfolk Southern acts to take advantage of lagging share prices. The company has an authorization to repurchase as many as 35.2 million shares over the next three years, which would represent more than $3.6 billion at current prices. That's more than 10% of Norfolk Southern's entire market cap and shows the extent to which management believes that investing internally in buying back shares might well be the best way to use a substantial portion of the railroad's free cash flow. At the same time, though, Norfolk Southern doesn't expect to skimp on capital expenditures, with plans to spend $2.4 billion on internal improvements in 2015.

Norfolk Southern needs to take further steps to ramp up its gain in what's becoming an increasingly competitive industry. Even with the ongoing challenges of coal, Norfolk Southern can take a lesson from CSX and other railroad players by seeking out opportunities in other industries to make up for lost shipping volume and get its growth back up to what investors want. Otherwise, Norfolk Southern could easily start lagging the rest of its peers in the railroad industry.