Norfolk Southern Corporation
NSC · NYSE
Dec 2026
Next quarter
Expected to report Jan 28, 2027 — estimated from last year’s reporting date.
Consensus is $3.18 EPS for Dec 2026 across 6 estimates, ranging $3.09 to $3.28.
NSC Sep 2026
- 4.02%
- $3.48
- $3.62
- —
- $3.53B
Reported results
- $3.53B
- $1.15B
- 32.61%
- $759.00M
- $3.37
Highlights
- Adjusted earnings: Adjusted diluted EPS was $3.62, 4.0% above the $3.48 consensus; GAAP diluted EPS was $3.37, versus $3.16 a year ago and $3.26 in Q2.
- Revenue growth: Revenue rose 14% year over year to $3.53 billion and 2% sequentially; excluding fuel, revenue increased 6% to a company record.
- Higher volumes: Units grew 3% across merchandise, intermodal and coal. Domestic intermodal volume rose 10%, while international intermodal volume fell 8%.
- Fuel pressure: Operating expenses increased 19% year over year to $2.38 billion, including a 77% jump in fuel expense to $420 million; adjusted operating ratio was 65.4%, versus 63.3% a year ago.
- Adjusted profit growth: Adjusted operating income increased 7% to $1.22 billion, and adjusted net income and EPS each rose 10%; GAAP operating income was $1.15 billion, up 5%.
- Operational gains: Workforce productivity reached a third-quarter record; the company eliminated 95 crew starts per week and took 200 cars offline per day while accommodating 3% carload growth.
- Updated investment outlook: 2026 adjusted operating expenses are expected to be just over $9 billion, including about $700 million of incremental fuel expense; capital spending guidance increased to roughly $2.1 billion from $1.9 billion.
- Incident and merger costs: Norfolk Southern recorded $28 million of Eastern Ohio incident expense and $42 million of merger-related expense in the quarter; first-nine-month operating cash flow fell to $2.72 billion from $3.30 billion.
Analysis
Norfolk Southern delivered a solid growth quarter, with adjusted diluted EPS of $3.62 beating the $3.48 consensus by 4.0%. GAAP diluted EPS was $3.37, up from $3.16 a year earlier and $3.26 in Q2. Revenue of $3.53 billion increased 14% year over year and 2% sequentially; GAAP operating income rose 5% year over year to $1.15 billion, while net income increased 7% to $759 million. On the company’s adjusted basis, EPS and net income each grew 10% year over year, to $3.62 and $815 million, respectively.
The defining feature was broad-based freight growth and pricing, tempered by sharply higher fuel costs. Volumes rose 3% in all three business groups, and revenue excluding fuel grew 6% to a record. But fuel expense climbed 77% year over year, and the adjusted operating ratio worsened to 65.4% from 63.3%; management said rising fuel prices pressured the ratio by about 250 basis points versus its prior expectation. Operations improved sequentially despite weather disruptions, and the company raised its 2026 capital spending outlook to roughly $2.1 billion to support growth and network resilience. It also reported $42 million of quarterly merger costs and continued cash outlays related to the Eastern Ohio incident.
Earnings and margins
- Adjusted results: After excluding merger-related and Eastern Ohio incident costs, adjusted operating income was $1.22 billion, up 7% year over year; adjusted net income rose 10% to $815 million and adjusted diluted EPS rose 10% to $3.62.
- GAAP comparison: Revenue increased 14% to $3.53 billion, while operating expenses rose 19% to $2.38 billion. GAAP operating income was $1.15 billion, up 5%, and net income was $759 million, up 7%.
- Margin: The GAAP operating ratio was 67.4%, compared with 64.6% a year earlier; the adjusted ratio was 65.4%, versus 63.3%. The year-over-year comparison reflects fuel and other cost pressure, partly offset by revenue growth.
- Sequential progress: Compared with Q2, revenue grew from $3.46 billion to $3.53 billion, operating income from $1.12 billion to $1.15 billion, net income from $734 million to $759 million, and GAAP EPS from $3.26 to $3.37.
Freight demand and pricing
- Broad-based volume: Total units increased 3% year over year. Merchandise volume rose 3%, intermodal units rose 3%, and coal tonnage increased 3%.
- Merchandise: Revenue increased 11% to $2.19 billion, supported by 3% volume growth and stronger average revenue per unit. Chemicals volume rose 9% and metals and construction volume rose 4%; automotive volume declined 8%.
- Intermodal: Revenue increased 21% to $919 million. Domestic units rose 10% amid stronger demand and constrained truck capacity, while international units declined 8% amid port congestion and ocean-carrier capacity shifts.
- Coal: Revenue rose 12% to $419 million, with export tonnage up 10%. Utility tonnage declined 2% in the quarter, which management attributed to plant outages and service disruptions.
- Revenue quality: Fuel-inclusive revenue grew 14%, while revenue less fuel rose 6% to a record. Management reported 3% growth in revenue per unit excluding fuel, reflecting pricing and mix.
Network execution
- Service and capacity: Management reported sequential improvement in foundational service measures despite disruptive northern weather. The network absorbed 3% carload growth, with train length and weight each up 4% year over year.
- Productivity actions: Workforce productivity reached a third-quarter record. Network changes eliminated 95 crew starts per week and took 200 cars offline per day, while targeted train consolidations reduced labor and locomotive needs.
- Safety: The preliminary year-to-date FRA personal injury index was 1.08, and the train accident rate of 1.74 was a company historical best.
- Savings and resources: Management said the company remained on track to deliver at least $650 million in cumulative cost savings. It is hiring in targeted locations and cited 420 locomotives in storage as available capacity for growth.
Fuel and investment outlook
- Fuel headwind: Fuel expense rose 77% year over year, from $237 million to $420 million. Management said fuel prices moved higher during the quarter and worsened the operating ratio by about 250 basis points versus its prior expectation.
- 2026 expense outlook: The company expects adjusted operating expenses to be just north of $9 billion, including approximately $700 million of incremental fuel expense versus its view at the start of the year. It said core operating costs remain within the original guide despite higher volumes.
- Capital spending: The 2026 capital expenditure outlook increased to roughly $2.1 billion from $1.9 billion, with spending intended to prepare for growth and improve network resilience and efficiency.
- Demand view: Management remained positive on near-term volume, particularly domestic intermodal and export coal, but noted that some truck-to-rail conversions may reverse if fuel prices fall and trucking capacity returns.
Incident and cash flow
- Eastern Ohio costs: The company recorded $28 million of incident expense in Q3, compared with $11 million of net benefits in the year-ago quarter. First-nine-month 2026 incident expense was $53 million, versus $243 million of net benefits in the comparable 2025 period.
- Cash impact: Operating cash flow for the first nine months fell to $2.72 billion from $3.30 billion, primarily due to incident-related cash payments. Incident payments were $345 million in the 2026 period.
- Liquidity: Cash and cash equivalents were $1.60 billion at September 30, up from $1.53 billion at year-end; long-term debt was $15.96 billion, compared with $16.48 billion at December 31, 2025.
Union Pacific merger
- Transaction costs: Merger-related expense was $42 million in Q3 and $145 million for the first nine months, compared with $15 million in each comparable 2025 period.
- Regulatory process: The proposed Union Pacific transaction remains subject to Surface Transportation Board approval. Management said the application is progressing and described a combined network as a way to reduce handoffs and offer broader service, while continuing to run the standalone railroad.
- Share repurchases: Norfolk Southern made no repurchases in the first nine months of 2026; the merger agreement restricts buybacks without Union Pacific’s consent. It repurchased 2.2 million shares for $533 million in the comparable 2025 period.
