$NSC · NORFOLK SOUTHERN CORP

Norfolk Southern filed its Q3 2026 10-Q, reporting railway operating revenues of $3.526B (+13.6% YoY), net income of $759M, and diluted EPS of $3.37. Revenue growth was broad-based across all commodity groups, led by Intermodal (+21%) and Chemicals (+16%). However, fuel expenses surged to $420M from $237M a year ago, and merger-related costs tied to the pending Union Pacific acquisition totaled $42M in the quarter. The operating ratio weakened to 67.4% from 64.6%.

Stock up 2.64% to $336.76 in the regular session, suggesting the market is rewarding the strong revenue growth and volume momentum despite margin compression from fuel and merger costs.

The 13.6% revenue jump signals strong rail demand, but the pending Union Pacific merger — with its $2.5B breakup fee and STB approval risk — is the dominant event for NSC shareholders.

Norfolk Southern's 13.6% revenue growth outpaces typical Class I rail peers, but the operating ratio deterioration mirrors industry-wide fuel and labor inflation. The Union Pacific merger, if approved, would reshape the North American rail landscape.

The pending Union Pacific merger carries a $2.5B reciprocal termination fee and requires STB approval — a regulatory process with no guaranteed outcome. Fuel price volatility remains a direct threat to operating margins, with fuel costs nearly doubling YoY.