AI Takeaway
NSC delivered 11.4% revenue growth to $3.465B in Q2 FY2026, but GAAP operating income and net income declined 4.3% and 4.4%, respectively, as sharply higher fuel costs, merger-related expenses, and the absence of prior-year Eastern Ohio incident insurance recoveries more than offset volume and pricing gains. Source: 10-Q Item 2 MD&A, pp.24-30.
Revenue
$3.46B
++11.41% YoY
EPS (Basic)
$3.26
-4.40% YoY
Operating Income
$1.12B
-4.34% YoY
Filed · Source: SEC EDGAR 10-Q filing
Norfolk Southern (NSC) reported Q2 FY2026 revenue of $3.46B, up 11.4% year over year. The company posted net income of $734M, down 4.4% from a year earlier, with diluted EPS of $3.26.
Second-quarter railway operating revenue increased 11% year over year to $3.465B. Total units rose 4% to 1.862M, while average revenue per unit increased 7% to $1,861; fuel surcharge revenue rose to $415M from $203M. Intermodal revenue grew 22% to $908M, with domestic intermodal volume up 11%, partly offset by a 3% decline in international volume.
Source: Source: 10-Q Item 2 MD&A, pp.24, 27-29.
Railway operating expenses increased 21% to $2.341B, exceeding the 11% revenue increase, and the GAAP operating ratio worsened to 67.6% from 62.2%. Fuel expense rose 85% to $405M due to higher locomotive fuel prices; the company also incurred $51M of merger-related expense and recorded $15M of Eastern Ohio incident expense versus a $47M net recovery in the prior-year quarter.
Source: Source: 10-Q Item 2 MD&A, pp.24, 29-30.
Excluding merger-related expenses, restructuring and other charges, and Eastern Ohio incident effects, adjusted operating income increased 5% to $1.196B, adjusted net income increased 7% to $793M, and adjusted diluted EPS increased 7% to $3.52. Adjusted operating ratio was 65.5%, compared with 63.4% in the prior-year quarter.
Source: Source: 10-Q Item 2 MD&A, pp.24-26.
First-six-month operating cash flow declined to $1.398B from $2.027B, primarily due to higher Eastern Ohio incident cash payments; such payments were $322M in the first six months of 2026. NSC did not repurchase common stock in the first six months of 2026, versus $456M in repurchases a year earlier, because the Merger Agreement generally prohibits repurchases without Union Pacific approval.
Source: Source: 10-Q Item 2 MD&A, pp.30-31.
At June 30, 2026, NSC had $1.1B of cash and cash equivalents, no borrowings under its $400M receivables securitization program, no borrowings under its $800M credit agreement, and no commercial paper outstanding. Management stated that cash on hand and operating cash flow are expected to be sufficient for ongoing obligations, subject to certain Merger Agreement restrictions on additional indebtedness.
Source: Source: 10-Q Item 2 MD&A, pp.31-32.
NSC reported current assets of $2.801B and current liabilities of $3.370B, producing a current ratio of 0.83x. This indicates that reported short-term liabilities exceeded reported short-term assets, which could increase reliance on operating cash generation and available financing for near-term obligations.
Source: Source: 10-Q Balance Sheet (XBRL), p.N/A; 10-Q Item 2 MD&A, p.31.
First-six-month operating cash flow decreased 31.0% year over year to $1.398B from $2.027B. Lower cash generation can reduce flexibility for capital spending, debt repayment, shareholder distributions, and other corporate uses if the trend persists.
Source: Source: 10-Q Cash Flow Statement (XBRL), p.N/A.
Cash and cash equivalents declined 18.0% year over year to $1.069B from $1.303B. Although NSC reported unused borrowing capacity in the MD&A, a lower cash balance provides a smaller immediate liquidity cushion than in the comparable prior-year period.
Source: Source: 10-Q Balance Sheet (XBRL), p.N/A.
Debt to equity was 1.78x at the reporting date, indicating that debt was substantial relative to stockholders’ equity. This capital structure may make financing costs and debt-management needs more consequential if operating cash flow weakens.
Source: Source: 10-Q Key Ratios (XBRL), p.N/A.
Reported EPS of $3.52 versus the $3.33 analyst consensus — a +5.6% beat for Q2 FY2026.
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $3.46B | $3.11B | +11.41% |
Operating Income | $1.12B | $1.18B | -4.34% |
Net Income | $734M | $768M | -4.43% |
EPS (Basic) | $3.26 | $3.41 | -4.40% |
EPS (Diluted) | $3.26 | $3.41 | -4.40% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $45.12B | $44.16B | +2.19% |
Current Assets | $2.8B | $2.91B | -3.65% |
Total Liabilities | $28.87B | $29.37B | -1.70% |
Current Liabilities | $3.37B | $3.67B | -8.10% |
Stockholders' Equity | $16.25B | $14.79B | +9.91% |
Cash & Equivalents | $1.07B | $1.3B | -17.96% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash FlowYTD | $1.4B | $2.03B | -31.03% |
Investing Cash FlowYTD | $-629M | $-1.44B | +56.17% |
Financing Cash FlowYTD | $-1.23B | $-930M | -32.26% |
Share BuybacksYTD | $5M | $456M | -98.90% |
D&AYTD | $710M | $692M | +2.60% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Margin | 32.4% | 37.8% | -5.34% |
Net Margin | 21.2% | — | — |
ROE | 4.5% | — | — |
ROA | 1.6% | — | — |
Current Ratio | $0.831 | — | — |
Debt to Equity | $1.776 | — | — |
Expected release date, analyst estimates & what to watch
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.
Norfolk Southern (NSC) delivered solid FY2025 results with revenue up 0.5% to $12.18B, while operating income surged 7.0% to $4.36B and net income grew 9.6% to $2.87B, reflecting meaningful margin expansion and operational efficiency gains.
Other companies in Rail Transportation
Norfolk Southern reported railway operating revenue of $3.465B, up 11% year over year. Total units increased 4%, average revenue per unit increased 7%, and fuel surcharge revenue increased to $415M from $203M; intermodal revenue was up 22% to $908M. Source: 10-Q Item 2 MD&A, pp.24, 27-29.
GAAP net income declined 4% to $734M and operating income declined 4% to $1.124B because railway operating expenses increased 21% to $2.341B. Major pressures included an 85% increase in fuel expense to $405M, $51M of merger-related expenses, and the absence of the prior-year net Eastern Ohio incident recovery. Source: 10-Q Item 2 MD&A, pp.24, 29-30.
Adjusted net income was $793M, up 7% year over year, and adjusted diluted EPS was $3.52, also up 7%. These non-GAAP figures exclude merger-related expenses, restructuring and other charges, and Eastern Ohio incident effects; adjusted operating ratio was 65.5%. Source: 10-Q Item 2 MD&A, pp.24-26.
NSC ended the period with $1.069B of cash and cash equivalents, a 0.83x current ratio, and $569M of negative working capital. It also had no outstanding borrowings under its $400M receivables securitization program or $800M credit facility, while first-six-month operating cash flow was $1.398B. Source: 10-Q Balance Sheet and Cash Flow Statement (XBRL), p.N/A; 10-Q Item 2 MD&A, p.31.
No. NSC did not repurchase common stock during the first six months of 2026, compared with $456M repurchased in the same period of 2025. The company said the Merger Agreement with Union Pacific generally prohibits share repurchases without Union Pacific approval, and it has suspended repurchase activity. Source: 10-Q Item 2 MD&A, p.31.