Q3 2026 results
| Metric | Result | Change |
|---|---|---|
| Net Income | $2.1 billion | Not stated |
| Adjusted EPS | $3.53 | 15% growth |
| Operating Revenue | $7.2 billion | 15% increase |
| Operating Ratio | 58.8% | Not stated |
| Cash from Operations | $8.3 billion | 18% growth |
Guidance and outlook
- Affirming reported EPS growth in the high single-digit range versus 2025 reported EPS of $11.98.
- Affirming ability to continue improving core operating ratio in 2026.
- Capital spend updated to $3.5 billion for 2026.
- Expecting fuel prices to average around $4.85 per gallon in the fourth quarter.
How management sounded
Positive (+7 on our -10 to +10 scale). Management highlighted record financial results, strong volume growth, and operational efficiency while maintaining a clear, unwavering stance on the Norfolk Southern merger benefits. Management sounded more upbeat than on 48% of the 190 calls we cover; most companies sound positive on their own calls, so the comparison says more than the label.
Q&A summary
Merger M&A
Asked: Chris Wetherbee (Wells Fargo) asked about the receptivity to the merger and potential concessions.
Answer: Jim Vena emphasized the end-to-end nature of the merger, the lack of significant overlap, and the clear benefits for the supply chain, stating they are confident in the application.
Volume Growth and Capital Allocation
Asked: Ken Hoexter (Bank of America) asked about sustaining growth and the increase in CapEx.
Answer: Jennifer Hamann and Eric Gehringer noted they have sufficient resources and buffer to handle growth, and the CapEx increase is to pull forward modernization and infrastructure projects.
Fuel Efficiency and Costs
Asked: Jordan Alliger (Goldman Sachs) asked about fuel efficiency and fourth-quarter impact.
Answer: Management explained that rail is more fuel-efficient than truck, and they are using technology and operational fundamentals to mitigate fuel costs, though they expect a greater impact in Q4 due to higher fuel price expectations.
Intermodal Profitability
Asked: David Vernon (Bernstein) asked about intermodal profitability and RPU trends.
Answer: Kenny Rocker and Jennifer Hamann explained that intermodal performance is improving, and they expect better pricing environments as contracts reset and service products support the market inflection.
What to watch before the next call
- The November 18 deadline for comments on the Norfolk Southern merger application.
- The potential for further regulatory discussions with the STB, DOJ, and DOT regarding the merger.
- Fuel price volatility and its impact on the fourth-quarter operating ratio.
