US Markets
Norfolk, Union Pacific Top Second-Quarter Views on Strong Freight Demand, Higher Fuel Surcharges
Norfolk Southern (NSC) and Union Pacific (UNP) logged stronger-than-expected second-quarter results amid robust freight demand and higher fuel surcharges, sending the shares of the merger-bound rail operators higher Thursday.Norfolk's adjusted earnings rose to $3.52 a share in the June quarter from $3.29 a year earlier, topping the FactSet-polled consensus of $3.32. Revenue jumped 11% to $3.47 billion, ahead of Wall Street's $3.38 billion views.The company's shares were up 5% in afternoon trade and have rallied 21% so far this year."Fuel surcharge was a major factor in the second quarter, helping to blunt some of the fuel expense pressures," Norfolk Chief Commercial Officer Claude Elkins said on an earnings conference call, according to a FactSet transcript. "If you look past these headline numbers, you'll see that even without fuel, we achieved record revenue in the quarter."Second-quarter operating expenses surged 15% year over year, more than two-thirds of which was driven by the "substantial rise" in fuel costs, Chief Financial Officer Jason Zampi said on the call.Separately, Union Pacific's second-quarter adjusted EPS rose to $3.41 from $3.03 a year earlier, topping the consensus of $3.24. Operating revenue grew 12% to $6.86 billion, exceeding the Street's $6.71 billion views.The company raised its full-year EPS growth outlook to high-single digit from mid-single digit.Union Pacific shares were rose 4.4% intraday, bringing its year-to-date gains to 32%."Solid core pricing combined with business mix to drive 175 basis points of freight revenue improvement," Chief Financial Officer Jennifer Hamann told analysts on a call, according to a FactSet transcript. Operating expenses increased 13%, with fuel expenses surging 63% amid a 60% jump in average fuel prices and 2% higher gross ton-miles, according to Hamann."Even against ongoing margin pressure from fuel, fuel prices have remained volatile, and our recent purchases have been over $4 a gallon," Hamann said. "Overall, a strong first half of 2026, coupled with an improved outlook, highlight our ability to grow volumes, deliver for customers, and manage costs."Last year, Union Pacific agreed to acquire Norfolk in a cash-and-stock deal valuing the smaller railroad operator at about $85 billion. The companies continue to make progress on the deal, Norfolk Chief Executive Mark George said Thursday.Price: $348.22, Change: $+17.28, Percent Change: +5.22%
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