Shares of rail shipper Norfolk Southern (NYSE:NSC) are in focus today after the company agreed to settle the Ohio train derailment consolidated class action lawsuit for $600 million and issued preliminary first-quarter numbers. The company expects the settlement to impact its first-quarter earnings, scheduled for April 24.
The Settlement
The toxic freight train derailment in February 2023 prompted a federal investigation and a class-action lawsuit. If approved by the court, the $600 million settlement will resolve all class action claims.
In addition to this settlement, Norfolk has contributed $104 million in community assistance and announced drinking water and home value assurance programs in the affected area.
Norfolk’s settlement could be the largest ever for a railroad incident in North America. Notably, the company expects the total costs related to the incident to exceed a billion dollars. Additionally, it is facing associated lawsuits from the state of Ohio and the U.S. Environmental Protection Agency.
Impact on NSC’s Q1 Results
Norfolk expects the $600 million settlement in principle and its recent reduction in headcount to impact its Q1 earnings by $2.26 per share. The company anticipates a GAAP EPS of $0.23 on revenue of roughly $3 billion for the quarter, with adjusted EPS expected to reach $2.49. Additionally, Norfolk foresees an impact of $50-$100 million on its Q2 top line from the Baltimore bridge incident.
What Is the Target for NSC Stock?
Norfolk’s share price has rallied by nearly 28% over the past six months. Overall, the Street has a Moderate Buy consensus rating on the stock, alongside an average NSC price target of $262.58.
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