Norfolk Southern drove industrials higher Monday as the railroad company's plan to bolster growth was well received.
Norfolk Southern (NYSE:NSC) rallied 4% as it outlined a plan to increase productivity, efficiency and revenue growth, targeting an operating ratio of 60% by 2021. Revenue is expected to grow at a compound annual rate of 5% through 2021, with capital expenditures during period forecast between 16% and 18% of revenue.
The company is also targeting an operating ratio improvement of at least 100 basis points to 65.4% in 2019, compared with the previous year.
The company, meanwhile, vowed to continue with its share buyback program and target a dividend payout ratio of 33%.
Other railroad stocks were also on track for gains as Union Pacific (NYSE:UNP) and CSX (NASDAQ:CSX) rose 1% for the day.
Railroad stocks have made a good start to the year, even as weekly data showed a continued downturn in freight traffic for the second week in a row.
On Feb. 6, the Association of American Railroads revealed that overall rail traffic volumes for U.S. rail carriers had fallen 9.1% in week 5 of 2019, which ended on Feb. 2.
The S&P 500 Industrials were up 0.6%, but remain roughly flat over the last 12 months.
