Yesterday, 10:50 AM
- UBS lines up three transportation stocks it sees as trading at attractive valuations.
- FedEx (FDX -0.2%): The shipping giant trades at a discount to UPS and is leveraged to e-commerce growth, notes the investment firm. The UBS price target of $195 implies 27% upside potential.
- Knight Transportation (KNX +2.9%): Lower fuel costs and strong GDP numbers bode well for the trucking stock. UBS has a price target of $33.
- Kansas City Southern (KSU +0.9%): UBS thinks additional capacity could make a difference for the railroad. A 19% breakout for shares to $111 is seen.
- Related ETFs: IYT, XTN.
Thu, Aug. 27, 3:58 PM
- Kansas City Southern (KSU +3.9%) is upgraded to Hold from Sell at Stifel, believing the stock has been sufficiently beaten down and is now fully valued.
- The firm says its previous rating had been based on poor company guidance related to overly optimistic expectations in oil, auto and intermodal, but the story has fully played out and KSU eventually could become "interesting" as those stories turn around.
- Railroads are broadly higher today: CSX +4.9%, NSC +5.1%, UNP +3.2%, GWR +6.6%, CNI +3.1%, CP +5.5%.
- Earlier: Stifel Nicolaus sees upside for CSX
Thu, Aug. 27, 10:49 AM
- U.S. railroad traffic increased 0.4% Y/Y to 567,943 carloads for the week ending August 22.
- Commodity groups posting an increase were miscellaneous, farm products, and motor vehicles. Traffic tailed off for metallic ores, petroleum, and coal.
- YTD total combined railroad traffic -1% to 17.938M carloads.
- Railroad stocks: UNP, NSC, CSX, CNI, ARII, GBX, CP, KSU, CNI, WAB, TRN.
Thu, Aug. 20, 10:11 AM
- Believing the company will be pressured by declining coal volumes and that its valuation still isn't cheap, Macquarie's Cleo Zagrean has downgraded Union Pacific (UNP -2.4%) to Neutral.
- Zagrean: "We now no longer expect that UNP will be able to achieve its 60+/- by full year '19 OR target ahead of time, and see further downside to our growth outlook if in fact more than 50% of the upcoming gas capacity translates into coal displacement rather than feeding new electric demand growth." 2016 and 2017 estimates have been cut by 2%-4%.
- At the same time, Zagrean has upgraded Kansas City Southern (KSU -0.8%) to Outperform, arguing it's the only railroad still seeing double-digit growth. "KSU becomes our top pick in US rail given the superior growth profile in a space where we continue to see mid single digit downside to LT EPS expectations. We would also pair KSU long against UNP short or GWR short given the potential for earnings surprises and the relative resilience of valuation multiples." His 2017 EPS estimate has been raised by 2%.
Mon, Aug. 10, 6:54 AM
- A majority of railroads will fall short of meeting a deadline of the end of the year to install PTC technology, warns the Federal Railroad Administration.
- Companies could be assessed "substantial" fines if the deadline to install positive train control systems isn't completed on time.
- Related stocks: CSX, GWR, KSU, CP, UNP, CSX, CNI, PWX, OTCPK:PRRR.
Fri, Aug. 7, 5:54 PM
- Rail traffic fell in July from a year ago as an increase in container volumes could not offset a sharp decline in oil and coal shipments, according to the latest monthly report from the Association of American Railroads.
- The number of carloads carrying oil and petroleum products fell 13.6% Y/Y to 67.9K last month, while coal volumes sank 12.5%; container shipments rose 3.8% to 1.2M, and traffic overall fell 1.8% to 2.7M.
- "Railroads are overexposed, relative to the economy in general, to the energy sector,” the AAR says in its traffic report.
- Relevant tickers: CSX, NSC, UNP, KSU, BRK.A, BRK.B
Tue, Aug. 4, 5:32 PM
Thu, Jul. 23, 8:59 AM
Wed, Jul. 22, 5:44 PM
- Orders for railroad tank cars during Q2 fell 29% Q/Q and 70% Y/Y, reflecting a broad decline in energy shipments at railroads.
- Carload volume for oil and petroleum products for the week ended July 18 was down 20% from last year and off 2.7% in the first 28 weeks of 2015 from the same period in 2014.
- Kansas City Southern (NYSE:KSU) recently reported a 46% decline in energy shipments, and Canadian Pacific (NYSE:CP) said Q2 revenue from crude oil shipping tumbled 29% Q/Q.
- Other relevant tickers: CSX, NSC, UNP, CNI, BRK.A, BRK.B, GBX, WAB, TRN, ARII, RAIL
Fri, Jul. 17, 8:15 AM
- Kansas City Southern (NYSE:KSU) reports adjusted operating income fell 13% in Q2 from a year ago on lower carload volumes.
- Operating ratio -20 bps to 68.1%. If lease termination costs are backed out the adjusted operating ratio was up 110 bps.
- Lower fuel costs were a significant factor as operating expenses fell 8% to $399M.
- Energy carload volume fell 31% off weakness in coal and frac sand.
- Intermodal volume was up 2%.
- Industrial & consumer products volume fell 5% as metals/scap transport was weak.
Fri, Jul. 17, 8:02 AM
Thu, Jul. 16, 6:51 PM
- Barclays downgrades the North American air freight and ground transportation sector to Neutral from Positive, after having been bullish on transports the past year, citing incrementally softer industrial demand, challenging commodity markets, high relative inventories and significant U.S. dollar appreciation.
- Barclays downgrades Canadian National (NYSE:CNI) and Norfolk Southern (NYSE:NSC) to Equal Weight from Overweight; it says CNI maintains ~10% revenue exposure to direct energy markets such as crude oil, frac sand and drilling pipe, while softening eastern coal volumes to continue to be “a significant earnings headwind” for NSC.
- The firm also cuts Kansas City Southern (NYSE:KSU) to Underweight from Equal Weight in response to lowered outlooks, relatively high valuation vs. benchmark Union Pacific (NYSE:UNP) and company-specific execution risks.
Thu, Jul. 16, 5:30 PM
Tue, Jul. 14, 9:29 AM
- Earnings season for the railroad sector launches tonight when CSX Corp. reports with expectations EPS will be flat compared to a year ago at $0.53.
- The company lowered its guidance in April to single-digit earnings growth for the full year in a shot heard across the sector.
- Freight traffic has been in decline due to lower shipments of crude oil, coal, and grains, although some analysts have forecast increased demand for consumer goods could help to offset trends in the energy market.
- Today's big miss in retail sales doesn't bode particularly well for that line of thought.
- Railroad stocks: UNP, NSC, CSX, CNI, ARII, GBX, CP, KSU, CNI, WAB, TRN.
- CSX earnings preview
Tue, Jul. 7, 11:02 AM
- Kansas City Southern (KSU +0.8%) is upgraded to Buy from Neutral with a $102 price target at UBS, which says near-term challenges already are reflected in the valuation while the railroad's long-term volume growth story is differentiated from the broader rail group.
- UBS expects only modest exposure to coal for KSU after 2015 vs. large U.S. rail peers, but sees "multiple clear drivers" for long-term growth, especially due to "new auto plants in Mexico, large investment in Lazaro Cardenas intermodal port infrastructure, and a long runway for share gain from truck in the cross border intermodal market."
- The firm expects Q2 to mark the point of KSU's weakest Y/Y EPS while volumes also are likely near a bottom.
Wed, Jun. 24, 11:16 AM
- Select railroad and trucking stocks trade weak after Q1 GDP figures are revised in-line with expectations. A read yesterday on durable goods was weak.
- Stocks from the transportation sector drifting lower include Knight Transportation (KNX -4.5%), Swift Transportation (SWFT -5.5%), ArcBest (ARCB -3.9%), YRC Worldwide (YRCW -2.2%), Greenbrier (GBX -1.6%), Heartland Express (HTLD -2.6%), Kansas City Southern (KSU -2.2%), Celadon Group (CGI -2%), JB Hunt Transport (JBHT -2.1%), Trinity Industries (TRN -1.6%).
- FedEx (FDX -0.9%) and UPS (UPS -0.8%) are also trailing broad market averages.
KSU vs. ETF Alternatives
Kansas City Southern Inc operates domestic & international rail operations in North America focused on the growing north/south freight corridor connecting key commercial & industrial markets in the central USA with industrial cities in Mexico.
Other News & PR