Norfolk Southern – Rail Traffic Shows Economic Slowdown

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Sept.21

Norfolk Southern (NSC : NYSE : US$65.95)

Choo Choo shares slumped after the company lowered expectations – earnings expectations expectations for the coming quarter.

For the upcoming Q3/12 period, the company now expects to earn $1.18-1.25 per share. 

This is down meaningfully from previous expectations of $1.63 for the quarter. Decreased coal and merchandise shipments, offset in part by growth in intermodal volumes, are together expected to reduce revenues by approximately $120 million compared with third quarter 2011. Fuel surcharge revenues are also anticipated to be approximately $80 million below the same period last year. Third-quarter 2011 fuel surcharge revenues included a favourable lag-effect of $52 million, whereas results for the current quarter are expected to be impacted by an unfavourable lag-effect in the range of $25-30 million.

Shares of other railways, such as CSX (CSX) and Canadian National Railway (CNR) also traded down.

Note that oil prices have rebounded this morning – attributed to the QE to infinity which also saw gold jump .  

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