Railroad giant Norfolk Southern Corporation (NYSE: NSC) was up 10% in just the last week, based in large measure on super 4Q and FY2007 earnings released a week ago, January 22. Fourth quarter operating revenue increased 6% to $2.5 billion, and net income increased 4% to $399 million. What makes these numbers even more impressive is that Norfolk Southern posted revenue increases at the same time it faced significantly higher fuel costs and a measurable reduction in shipments by volume. Coal shipments dropped 2% by volume, while general merchandise shipments dropped a hefty 10% by volume.

The story is the same for FY2007 results. Revenue increased while shipments by volume decreased. And the railroad still made money. The stock closed at $45.07 on January 21, but closed at $52.00 on January 28. Very nice capital appreciation for a week. The company increased its dividend payout by 12% to $0.29 per share, a 32% increase over the last year, and the 102nd consecutive quarter of dividend payout. Clearly, Norfolk Southern is a stock for the very long haul.

Recently our own Sheldon Liber has posted several very insightful columns summarizing U.S. Class 1 railroads. Here's a bit of follow up information. Winter 2006-2007 was not kind to the railroads. Burlington Northern Santa Fe (NYSE: BCI) has stated it will take an $80 million charge in first quarter 2007, approximately 14 cents per share, due to an increase in environmental compliance costs, $65 million, and the write-off of a technology system, $15 million. These charges against profits will reduce EPS to $0.96, compared to EPS of $1.09 in first quarter 2006. BNSF operates 32,000 miles of rail in 28 states and parts of Canada. It hauls more grain than any other Class 1 railroad, and hauls enough low-sulfur coal to supply 10% of total US electricity generated. Despite recent wintery problems, Warren Buffett, the Oracle of Omaha, thinks BNSF is a good bet. Berkshire Hathaway (NYSE: BRK-A) owns 40 million shares of BNSF, approximately 11% of the total shares. BNSF stock closed at $87.99, down $0.09.

Norfolk Southern (NYSE: NSC) also reported winter problems that will have a negative impact on earnings. Operating 21,000 miles of track in 22 Eastern states, Norfolk Southern saw a 4.4% decline in shipping volume in first quarter 2007 from first quarter 2006. This will result in 3% lower EPS than forecast. Norfolk Southern plans to release first quarter earnings on 25 April 2007. The stock closed at $52.74, down $0.15.