NSC US S&P 500Russell 1000 Earnings call · transcribed from the recording
Norfolk Southern (NSC) · Q3 2026 results and valuation
Share price: $330.59 · 2026-11-11
Norfolk Southern is a freight railroad company operating in the Eastern United States and parts of Canada. It transports goods across a network of rail lines in 22 states and the District of Columbia. Source: Wikipedia
Results Q3 2026 vs Q2 2026 · previous quarter · published 22 Oct 2026 and 23 Jul 2026
Net income up 3.4% on the previous quarter. Management sounded upbeat, in its script and in answers to analysts.
1 · Numbers
+3.4%
Net income vs Q2 2026
Outlook given
Net income 759.0M vs 734.0M
Revenue +1.8%
Why Against the same quarter last year (+6.8%), net income rose because of 3% volume growth across business verticals, a 14% increase in revenue including fuel surcharges, and the achievement of $650 million in cumulative cost savings.
2 · How management spoke
Upbeat
More upbeat than 72% of company calls
Answers to analysts: typical, in line with the script.
Similar to last call.
3 · What stood out
Norfolk Southern increased its 2026 capital expenditure outlook to roughly 2.1 billion dollars from the original 1.9 billion dollars.
Valuation
Is Norfolk Southern undervalued?
Reverse DCF on net income from the last full fiscal year (no meaningful free cash flow: a bank, insurer or a year of negative cash flow) (2025-12-31), grown for 10 years, discounted back, plus a terminal value. “Implied growth” is the rate the current price assumes.
At −1.5% growth a year (3-year revenue growth), the model's fair value is $131.05 a share — the stock trades 152% above it. Today's price assumes 11.2% growth a year.
Current price
$330.59
close of 2026-11-11
Market implies growth of iThe yearly free-cash-flow growth, for the next 10 years, that today’s share price already assumes. If you believe the company grows faster than this, the stock is cheap under this model; slower, and it is expensive.
+11.2% for 10 yrs
Fair value / share
$131.05
Buy below
$98.29
Price vs fair value
Overvalued 152%
Price vs buy-below price
Overvalued >200%
Read between the lines
-
Guidance
NSC updated its full-year adjusted OPEX guidance to just north of $9 billion, which includes approximately $700 million of incremental fuel expense compared to the beginning of the year.
-
Figure
NSC achieved 14% overall revenue growth for the third quarter, which included fuel surcharges.
Source quote
“We achieved 14% overall revenue growth for the third quarter, which is inclusive of fuel surcharge.”
-
Guidance
The company increased its 2026 capital expenditure outlook to roughly 2.1 billion dollars from the original 1.9 billion dollars.
-
Guidance
NSC is accelerating targeted capital investments into this year to accommodate continued volume growth and maintain expected service levels for customers.
-
Guidance
NSC projects a positive outlook for new industrial development activity because tariff-related concerns are easing.
3 more
-
Key theme
Over time, when fuel goes back to where it was, you can expect that some will revert back to a large portion of what Norfolk Southern has gained will eventually, and it might take a year or two, but it will eventually go back to…
Source quote
“But over time, when fuel goes back to where it was, you can expect that some will revert back to a large portion of what we've gained will eventually, and it might take a year or two, but it will eventually go back to the highway unless this industry does some very structurally different things, which is really what I was alluding to there at the end.”
-
Key theme
Domestic plants burned more tons than were delivered for most of the year, leading the company to expect replenishment.
Source quote
“On the domestic side, we saw our plants burn, exceed the amount of tons that we delivered to them really for most of the year here. So we think that there's some replenishment that's going to happen.”
-
Key theme
At the same time, the new company will have what I would consider to be a prime opportunity to convert a lot of the freight that still rides the highway in the east that would much rather save money, save fuel, and…
Source quote
“And at the same time, the new company will have what I would consider to be a prime opportunity to convert a lot of the freight that still rides the highway in the east that would much rather save money, save fuel, and deliver value to their customers using Intermodels.”
Tone
How upbeat the language was, compared with other companiesiTone counts positive minus negative finance words, adjusted for length. Executives mostly speak positively, so the labels compare each call with every company's latest call: “typical” is the middle third, “very upbeat” the top tenth, “cautious” the bottom tenth.. Dot: Q3 2026. Ring: Q2 2026.
Script and answers carried a similar tone, so the script's message held up under questioning.
Sentences that drove the tone
“Looking within merchandise, volumes increased 3% and revenue less fuel achieved another record increasing 5% from a year ago.”
“Brian will detail some of the changes that helped us achieve record productivity performance in the quarter, and we are making other operational improvements while adding resources that will improve...”
“Volumes there increased 3% reflecting strong freight demand and a tighter truck market conditions that favorably positioned our intermodal partners to succeed, with particular strength in our domestic and premium...”
Full figures
USD · SEC EDGAR XBRL (10-Q, period end 2026-09-30)
| Metric | Q3 2026period end 2026-09-30 | Q2 2026period end 2026-06-30 | Change | Q3 2025 | YoY |
|---|---|---|---|---|---|
| Revenue | 3.53B | 3.46B | +1.8% | 3.10B | +13.6% |
| Operating income | 1.15B | 1.12B | +2.3% | 1.10B | +4.7% |
| Net income | 759.0M | 734.0M | +3.4% | 711.0M | +6.8% |
| EPS | 3.37 | 3.26 | +3.4% | 3.16 | +6.6% |
| P/E today 26.8 | 25.9 | 26.8 | −0.9 | 22.9 | +3.0 |
Topics
Most discussed now
- Please note that all references to Norfolk Southern's prospective operating ratio during today's call are being provided on an adjusted…
- Norfolk Southern was pleased with how the business performed in a dynamic operating environment and believe that the underlying…
- Norfolk Southern's third quarter was strong with steady execution, making notable improvements to its network while delivering solid…
- Collectively, Norfolk Southern delivered very strong revenue and operating income growth, while it continued to advance productivity.
- What you saw in the quarter is us capturing the increased customer demand.
Faded since Q2 2026
- Dropped The primary levers for improving service and productivity across the network are running the plan, aligning the resources with demand,...
- Dropped Norfolk Southern is really running the plan, refining its processes getting back to basic fundamental railroading of on time over the…
- Fading Working with Norfolk Southern's teams, understanding challenges firsthand and driving the actions necessary to improve service and…
- Fading Volume increased 3% and benefiting from the continued ramp-up of Norfolk Southern's new metallurgical coal export customer as well as…
Latest announcements
Official filings, newest first. Summaries are generated from each filing and its attachment; every figure is checked against the source.
- Results of operations; Regulation FD disclosure · SEC 8-K
Norfolk Southern reported third-quarter 2026 revenue of $3.5 billion, up 14% from the third quarter of 2025, with diluted earnings per share of $3.37, up 7% year-over-year.
- Results of operations; Regulation FD disclosure · SEC 8-K
Norfolk Southern reported second-quarter 2026 railway operating revenues of $3.5 billion, an 11% increase compared to the second quarter of 2025.
- Director or officer change; Regulation FD disclosure · SEC 8-K
The company appointed Brian Barr as Chief Operating Officer with a $600,000 base salary, a 130% incentive award opportunity, and a cash retention bonus increased to $2 million.
- Shareholder vote results · SEC 8-K · routine
- Results of operations; Regulation FD disclosure · SEC 8-K
Norfolk Southern reported first-quarter 2026 revenue of $3.0 billion, up $5 million from the first quarter of 2025, while income from railway operations fell 23% to $877 million.
- Material agreement · SEC 8-K
Norfolk Southern Corporation entered into amended and restated agreements on April 1, 2026, to renew the lease of its corporate headquarters for five years with an aggregate lease amount of approximately $498.7 million.
- Results of operations; Regulation FD disclosure · SEC 8-K
Norfolk Southern reported 2025 full-year railway operating revenues of $12.2 billion, up $57 million from 2024, and income from railway operations of $4.4 billion, an increase of 7% over 2024.
- Regulation FD disclosure · SEC 8-K
Union Pacific and Norfolk Southern filed a merger application with the Surface Transportation Board on December 19, 2025, to create a transcontinental railroad with an estimated $2.1 billion in incremental capital investment.
Catalyst calendar
management-stated targets — from the latest earnings call; plans, not promises.
-
as we close out 2026 and continue into next year
efforts to improve network performance showing more clearly
Source quote
“And you should expect to see these efforts show up more clearly as we close out 2026 and continue into next year.”
-
the remainder of 2026
outlook for coal
Source quote
“As we turn to coal, the outlook is positive for the remainder of 2026, and we expect growth to be led primarily by our export franchise, but will also be supported by favorable market conditions within our utility business.”
-
2026
capital expenditure outlook
Source quote
“Now we are increasing our capital expenditure outlook and expect 2026 capex to be roughly 2.1 billion dollars which is up from 1.9 billion originally.”
-
the middle part of 2026, or really the second quarter of 2026
volume inflection
Source quote
“But it was exactly then you had to have the conviction to go and really augment your T &E resources and significantly increase for what eventually became a volume inflection in the middle part of 2026, or really the second quarter of 2026.”
-
July
3.75% increase in wage rates
Source quote
“So we've got a 3.75% increase that just went into effect in July and another 3.5% next July.”