Norfolk Southern Corporation

Norfolk Southern Corporation is an American Class I freight railroad that operates approximately 19,100 route miles across 22 states and the District of Columbia, primarily in the Southeast, East, and Midwest, generating $12.2 billion in railway operating revenues in fiscal 2025. The company moves raw materials, intermediate goods, and finished products across three commodity groups — Merchandise, Intermodal, and Coal — and serves every major Atlantic Coast container port as well as key Gulf Coast and Great Lakes terminals.

This is a story about a railroad in the middle of a transformation it did not choose. The February 2023 derailment in East Palestine, Ohio upended Norfolk Southern's reputation, its financials, and its management. The $1.1 billion charge in 2023 pushed the operating ratio to 76.5%, a number that would have been unthinkable for a Class I railroad a decade earlier. Since then, the company has replaced its CEO, overhauled its operating plan, settled class-action litigation, and, in July 2025, announced a merger agreement with Union Pacific that would create the first single-line transcontinental railroad in the United States. The file turns on a single question: whether the merger closes, and at what cost.

Between the derailment and the merger, Norfolk Southern has quietly rebuilt. The GAAP operating ratio fell from 76.5% in 2023 to 64.2% in 2025. Cash from operations reached $4.4 billion. The management team installed after the 2024 activist battle has delivered roughly $500 million in cumulative cost savings over two years and set a target of at least $150 million more in 2026. The question for investors is how much of this recovery is sustainable — and how much is a railroad running to stand still while it waits for a merger that may or may not close.