AI Takeaway
Norfolk Southern's Q1 2026 revenue was essentially flat at $3.0B (+0.2% YoY), but operating income plunged 23.5% to $877M and net income fell 27.1% to $547M, reflecting significant cost pressures that sharply compressed margins and operating cash flow.
Revenue
$3B
++0.17% YoY
EPS (Basic)
$2.43
-26.59% YoY
Operating Income
$877M
-23.47% YoY
Filed · Source: SEC EDGAR 10-Q filing
Total revenue edged up just 0.2% YoY to $2.998B in Q1 2026 from $2.993B in Q1 2025, suggesting the company maintained its top-line but faced headwinds preventing meaningful growth in a challenging freight environment.
Source: Source: 10-Q Income Statement (XBRL Financial Data)
Operating margin contracted sharply by approximately 9 percentage points YoY, falling from 38.3% in Q1 2025 to 29.3% in Q1 2026, indicating that cost growth significantly outpaced revenue growth and weighed heavily on profitability.
Source: Source: 10-Q Income Statement & Key Ratios (XBRL Financial Data)
Operating cash flow dropped 63.8% YoY to $344M from $950M, a steep decline that signals meaningful working capital headwinds or elevated cash operating costs beyond what is captured in net income alone.
Source: Source: 10-Q Cash Flow Statement (XBRL Financial Data)
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Upgrade to unlockOperating margin fell from 38.3% to 29.3% YoY, a decline of roughly 9 percentage points in a single quarter. If cost pressures persist or revenue growth remains muted, profitability could continue to erode materially in subsequent quarters.
Source: Source: 10-Q Key Ratios & Income Statement (XBRL Financial Data)
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Upgrade to unlockReported EPS of $2.65 versus the $2.54 analyst consensus — a +4.5% beat for Q1 FY2026.
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $3B | $2.99B | +0.17% |
Operating Income | $877M | $1.15B | -23.47% |
Net Income | $547M | $750M | -27.07% |
EPS (Basic) | $2.43 | $3.31 | -26.59% |
EPS (Diluted) | $2.43 | $3.31 | -26.59% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $45.11B | $43.8B | +3.00% |
Current Assets | $3.02B | $2.7B | +11.96% |
Total Liabilities | $29.31B | $29.29B | +0.07% |
Current Liabilities | $3.33B | $3.45B | -3.33% |
Stockholders' Equity | $15.8B | $14.51B | +8.91% |
Cash & Equivalents | $1.34B | $1.01B | +33.30% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash Flow | $344M | $950M | -63.79% |
Investing Cash Flow | $-213M | $-1.02B | +79.14% |
Financing Cash Flow | $-320M | $-564M | +43.26% |
Share Buybacks | $5M | $248M | -97.98% |
D&A | $352M | $346M | +1.73% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Margin | 29.3% | 38.3% | -9.04% |
Net Margin | 18.2% | — | — |
ROE | 3.5% | — | — |
ROA | 1.2% | — | — |
Current Ratio | $0.907 | — | — |
Debt to Equity | $1.855 | — | — |
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Norfolk Southern reported Q1 2026 net income of $547M, down 27.1% YoY, with EPS of $2.43 versus $3.31 in Q1 2025. Revenue was nearly flat at $2.998B (+0.2% YoY), but operating income fell 23.5% to $877M due to significant cost pressures.
NSC's operating margin fell sharply from 38.3% in Q1 2025 to 29.3% in Q1 2026, a decline of roughly 9 percentage points. This suggests that operating costs grew substantially faster than revenue, which was essentially flat, compressing profitability significantly.
Operating cash flow dropped 63.8% YoY to just $344M in Q1 2026, compared to $950M in Q1 2025, which is a dramatic deterioration. This led NSC to nearly halt share buybacks, spending only $5M on repurchases versus $248M in the prior-year quarter.
NSC's balance sheet shows mixed signals: stockholders' equity grew 8.9% YoY to $15.8B and cash rose 33.3% to $1.341B, which are positives. However, the current ratio is below 1.0 at 0.91 and the debt-to-equity ratio is elevated at 1.85, reflecting a heavily leveraged capital structure with near-term liquidity that bears watching.
The most pressing risks include the sharp margin compression (operating margin down ~9 ppts YoY), the dramatic 63.8% drop in operating cash flow, and a current ratio below 1.0 that signals limited short-term liquidity. If cost pressures are not reversed in coming quarters, earnings and cash generation could remain under significant pressure.