Operating income from railway operations increased 25 percent to $800 million in the quarter, but "were around 7 percent below our estimate offset by higher taxes," said Fadi Chamoun, managing director at BMO Capital Markets.
Norfolk Southern is the last of the major U.S. railroads to report results
Union Pacific Corp, the No. 1 U.S. publicly held railroad, last week reported higher-than-expected results and forecast record profit in 2012
"The overall outlook is constructive," Chamoun said of Norfolk Southern, noting "pricing growth continues to track well in excess of cost inflation and cost inflation has eased."
Norfolk Southern on Jan. 13 also announced this month that it loaded its largest volume ever for its Pier 6 coal transloading facility at Lamberts Point in Norfolk. Them metallurgical coal was headed to China, the company said, citing growing worldwide demand for U.S. coal.
"The results don't change our position," said Dan Morris, president of Morris Capital Advisors and Manor Investment Funds in Malvern, Pennsylvania. "We're a holder of the stock and will continue to be. These are pretty good results in an economy that's not real strong."
The company said it plans to spend $2.4 billion this year to expand facilities and open intermodal terminals, to draw traffic from more expensive and congested highways.
Intermodal refers the shipment of goods in containers that can be moved from one form of transportation to another, such as from train to ship or truck to train.
Norfolk Southern, the third-largest publicly held U.S. railroad, on Tuesday reported that net income rose to $480 million, or $1.42 per share, in the fourth quarter, from $402 million, or $1.09 per share. Analysts on average estimated $1.40 a share, according to Thomson Reuters I/B/E/S.
Volume rose 6 percent in the quarter from a year ago.
Quarterly operating revenue for the Norfolk, Virginia-based company rose 17 percent to $2.8 billion, compared with analyst forecasts of $2.84 billion.
Norfolk Southern on Tuesday also announced an increase in its quarterly stock dividend by 9.3 percent, or 4 cents per share, to 47 cents.
