Norfolk Southern Corp. (NYSE:NSC) shares traded higher Thursday after the railroad operator reported second-quarter 2026 results that beat analyst expectations for adjusted earnings and revenue.
Adjusted diluted EPS of $3.52 topped the $3.31 estimate, while railway operating revenue rose 11% year over year to a record $3.465 billion, beating the $3.369 billion estimate.
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Earnings and Margins
GAAP diluted EPS fell 4% to $3.26 from $3.41, while net income declined to $734 million from $768 million. Adjusted net income increased 7% to $793 million from $741 million.
Railway operating income fell 4% to $1.124 billion from $1.175 billion, while adjusted operating income rose 5% to $1.196 billion from $1.138 billion.
The GAAP operating ratio increased to 67.6% from 62.2%, while the adjusted ratio deteriorated 210 basis points to 65.5% from 63.4%.
Higher fuel costs and related surcharge revenue created a 110-basis-point headwind.
Revenue and Volume
Total volume increased 4% to 1.862 million units from 1.793 million, while revenue per unit rose 7% to $1,861 from $1,734.
Merchandise revenue gained 8% to $2.133 billion, intermodal revenue climbed 22% to $908 million, and coal revenue increased 7% to $424 million. Revenue excluding fuel surcharges rose 5%.
Operations and Cash
Gross ton miles increased 5% to 95.5 billion from 90.6 billion. Gross ton miles per employee rose 7% to 5,020 from 4,684 as average employment declined 2%.
Train speed fell to 19.9 mph from 21.6 mph, while terminal dwell increased to 24 hours from 22.7 hours.
Adjusted results excluded $51 million of merger-related expenses, $15 million tied to the Eastern Ohio incident and $6 million of restructuring charges, adding 26 cents to diluted EPS.
First-half operating cash flow fell to $1.398 billion from $2.027 billion. Cash declined to $1.069 billion from $1.303 billion, while total debt decreased to $16.616 billion from $17.367 billion.
Outlook
Norfolk Southern expects 2026 adjusted operating expenses of $8.8 billion to $8.9 billion, including a $400 million to $500 million incremental fuel impact versus its original guidance.
Capital spending is expected at $1.9 billion, down about $300 million, or 14%, from 2025.
The company remains on track for at least $650 million of three-year cost reductions and said merger-related competition will pressure volumes in the short and medium term.
NSC Price Action: Norfolk Southern shares were up 4.58% at $346.92 at the time of publication on Thursday, according to Benzinga Pro data.
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