Benzinga | Jan 26, 2021 10:21AM EST

Earnings Preview: Norfolk Southern

On Wednesday, January 27, Norfolk Southern (NYSE:NSC) will release its latest earnings report. Benzinga's outlook for Norfolk Southern is included in the following report.

What Are Earnings, Net Income, And Earnings Per Share?

Earnings and especially earnings per share (EPS) are useful measures of a company's profitability. Total earnings, which is also referred to as net income, equals total revenue minus total expenses. EPS equals to net income divided by the number of shares outstanding.

Earnings And Revenue

Based on management's projections, Norfolk Southern analysts model for earnings of $2.48 per share on sales of $2.54 billion. In the same quarter last year, Norfolk Southern announced EPS of $2.55 on revenue of $2.69 billion.

What Are Analyst Estimates And Earnings Surprises, And Why Do They Matter?

Analysts who cover this company will publish forward-looking estimates of its revenue and EPS each quarter. Averaging together every EPS and revenue prediction that each analyst makes about a company in a quarter yields the "consensus estimates." A company posting earnings or revenue above or below the consensus estimate is known as an "earnings surprise" and may move the stock by a considerable margin.

The Wall Street estimate would represent a 2.75% decline in the company's earnings. Sales would have fallen 5.58% from the same quarter last year. Norfolk Southern's reported EPS has stacked up against analyst estimates in the past like this:

Quarter Q3 2020 Q2 2020 Q1 2020 Q4 2020EPS Estimate 2.38 1.38 2.25 2.28EPS Actual 2.51 1.53 2.58 2.55Revenue Estimate 2.51 B 2.07 B 2.57 B 2.71 BRevenue Actual 2.51 B 2.08 B 2.62 B 2.69 B

Stock Performance

Shares of Norfolk Southern were trading at $246.01 as of January 25. Over the last 52-week period, shares are up 14.25%. Given that these returns are generally positive, long-term shareholders are probably satisfied going into this earnings release.

Do not be surprised to see the stock move on comments made during its conference call. Norfolk Southern is scheduled to hold the call at 08:45:00 ET and can be accessed here.