Impressive Quarter for North America's Rails

With the earnings season behind them, the results of North America’s top tier railways appear to have impressed UBS analyst Rick Paterson. “The North American rails just completed one of the best quarters we’ve ever seen – particularly in relation to the economic environment –with the big four U.S. rails averaging 37% [earnings per share] growth [year over year],” he said.

Big gains were at Canadian National Railway Co. (CNI) and Kansas City Southern (KSU), which saw their earnings increase 14% and 9% respectively during the third quarter alone. Norfolk Southern Corp. (NSC) and Burlington Northern Santa Fe Corp. (BNI) both had “big beats,” he said. Both Union Pacific Corp. (UNP) and CSX Corp. (CSX) had raised their guidance rather than keeping a “stale” one, he noted.

“Admittedly, accelerating EPS growth was powered to a degree by falling fuel prices, and with the continuing pullback in oil we expect more of the same in Q4,” Mr. Paterson said. “As we see it: get long rails.”

Canadian Pacific Railway Ltd. was the only major railway to report a slip in earnings, down 2% year over year.

Canadian volumes took a major tumble in the week 43 of 2008, with carloads down 10% with every commodity group lower led by auto [-33%], paper and forestry [10%] and coal [-10%].  U.S. volumes were down 4.3% year over year last week.

[click to enlarge]

Chart courtesy of UBS

Comments

[stocks:]

Impressive America Keep it up

2008 Oct 31 11:05 AM

[bbowen7:]

A year or two ago these articles would deal only with US railroads. It is good to see that many analysts now understand that CNI is the best railroad in North America - best route structure; best operating practices; best management.

2008 Oct 31 12:18 PM

[Pipo:]

Warren increased his stake in railroad Burlington Northern Santa Fe recently. Visit a Warren blog at:

warrenbuffettstocks.bl.../

2008 Nov 01 08:34 AM