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COMPANY OF THE DAY : BURGER KING WORLDWIDE, INC

Trefis has launched coverage of Burger King with a price estimate of $29. Burger King has three primary segments - Franchised Royalties, Franchise Rent & Fees, and Company-Operated Restaurants. It has decided to franchise the majority of its restaurants and focus on international expansion and healthier menu options to drive future growth. Our launch article details our outlook for the company.

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FORECAST OF THE DAY : COMCAST'S NBCUNIVERSAL THEME PARK REVENUES

Comcast's Universal Studios Hollywood will host a new attraction based on its popular Fast and Furious film series. The theme park announced plans to add a 3-D, HD feature to the park's Studio Tour tram ride by summer 2015. While theme parks are just a small part of Comcastâ s business, they help promote other NBCUniversal properties and bring in stable cash flows. We expect theme park revenues to exceed $3 billion by the end of the decade.

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Trends That Could Drive Baker Hughes' Q1 Earnings
  • by , 1 hours ago
  • tags: BHI
  • Baker Hughes (NYSE:BHI), the world’s third-largest oilfield services company, is expected to release its Q1 2014 earnings on April 17. We expect the company’s earnings to improve on a year-over-year basis, driven by stronger exploration and production activity in international markets and parts of North America. During Q4 2014, the company’s revenues grew by around 1% sequentially to $5.86 billion, while pre-tax profit margins fell from around 11% in Q3 to about 10%. Below we take a look at some of the factors that could drive the company’s performance for this quarter.
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    Schlumberger Earnings Preview: Watching The North American Business
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  • tags: SLB BHI HAL
  • Schlumberger (NYSE:SLB), the world’s largest oilfield services company, is expected to release its Q1 2014 earnings on April 17. We expect the company’s earnings to improve on a year-over-year basis, driven by higher exploration and production activity in regions such as Africa, the Middle East, Asia Pacific and the U.S. Gulf of Mexico. During the Q4 2013, Schlumberger revenues grew by around 7% year-over-year to about $11.9 billion, while net income was up by around 22% to about $1.66 billion. In this note, we take a look at some of the factors that could influence the company’s North American business.
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    UnitedHealth Earnings Preview: Focus On Market Share, Medicare Cuts
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  • tags: UNH MET AIG PRU
  • UnitedHealth Group (NYSE:UNH) is scheduled to report earnings for the first quarter of 2014 on Thursday, April 17. The health insurance giant beat market expectations for the fourth quarter of 2013 with 14% EPS growth and an 8% year-on-year increase in revenues. This growth was helped by the launch of the new health insurance exchanges established under the Affordable Care Act (ACA) as well as expansion in the Optum division and in Brazil. However, government funding cuts to the Medicare Advantage program exerted downward pressure on the company’s margins, as its medical care ratio (medical costs to premiums) for the year increased 110 basis points to 81.5%. We expect UnitedHealth to maintain top-line growth through the first three months of the year, but margins will be key to the company’s performance. Our $74 price estimate for UnitedHealth’s stock is in line with the current market price.
    New Fund Brings You the Cheapest Stocks in the World
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  • tags: SPY VEU GVAL
  • Submitted by Wall St. Daily as part of our contributors program   New Fund Brings You the Cheapest Stocks in the World One of the big revelations for financial market strategists and pundits in 2014 has been the outperformance of value stocks. This really shouldn’t be a surprise, though, as value tends to outperform growth over the long term. For example, the Russell 1000 Value Index has returned an annualized 9.7% over the past decade, compared to the Russell 1000 Growth Index’s 8.4% annual total return. But the rotation into value isn’t the only development we should be watching – foreign stocks have started to outperform the U.S. market, too. In the short span of time since my test last month, the SPDR S&P 500 ETF Trust ( SPY) has declined 2.8%, while the Vanguard FTSE All-World ex-US ETF ( VEU ) is only down 0.8%. So when you consider that value stocks outperform over the long term . . . And when you also consider that foreign stocks look like they’ve started to shine after generally underperforming their U.S. counterparts for the last few years . . . Then isn’t global value the place to be? If so, how would we even go about selecting and investing in global value stocks? Global + Value = Opportunity As it turns out, an exciting new offering – the Cambria Global Value ETF ( GVAL ) – can help us in our quest for value. This exchange-traded fund was just launched in March 2014, and its methodology is based on the work done by Benjamin Graham and David Dodd. These men authored the investment classic Security Analysis, and are considered by many to be the fathers of value investing and security analysis. Graham and Dodd’s method of comparing stocks using earnings that have been smoothed over the long term was popularized by Robert Shiller and his version of the cyclically adjusted price-to-earnings ratio (CAPE). The Cambria Global Value ETF uses a similar approach developed by its managers, Mebane Faber and Eric Richardson. It selects the most attractively valued stock markets from a universe of 45 developed and emerging market countries. It then invests in companies within these markets that are estimated to be trading at discounts to their intrinsic values. Essentially, GVAL invests in classic value companies within the cheapest markets in the world based on long-term valuation metrics. The fund does this for an annual fee of 0.69%, which is reasonable for an international ETF that gives us exposure to markets that are hard for us to invest in directly. International Diversification The fund currently has an allocation to the following countries: Brazil, Ireland, Spain, Portugal, Italy, Israel, Austria, Russia, Greece and the Czech Republic. The Czech Republic is a nice inclusion, because it’s not easy to gain exposure to this emerging market, and it happens to be one of the highest-yielding countries in the world. The market-cap-weighted average dividend yield in this developing European nation is a sky-high 5.2%. Indeed, value and high dividend yields tend to go hand in hand. Now, GVAL has yet to pay a dividend, but according to Bloomberg data, the fund’s holdings have an average dividend yield of 3.4%, which is very solid. With global value stocks poised to dramatically outperform in the long run, investors should seriously consider the Cambria Global Value ETF as a core portfolio holding. Out-of-favor stocks are often the best relative values, and this Cambria fund systematically selects these unloved gems. I think this new fund is going to be very successful. Safe (and high-yield) investing, Alan Gula, CFA The post New Fund Brings You the Cheapest Stocks in the World appeared first on Wall Street Daily .
    How to Survive the Coming Correction
  • by , 3 hours ago
  • tags: BP NDAQ NBL WPL
  • Submitted by Wall St. Daily as part of our contributors program   How to Survive the Coming Correction Over the past five trading sessions, the VIX – or Volatility Index – has seen a major pickup, soaring by 25%. The meltdown began just over a week ago with the Nasdaq, which suffered its worst three-day loss since 2011. Pundits have been piling on about overvaluation in the market, while other emerging markets, tension in Russia, and jitters about interest rates and local growth are creating a nervous environment for investors. Personally, I’d like nothing more than a nice correction, painful as it would be on paper for a lot of people (myself included). You see, corrections present opportunity . . .  and you should be prepared with a list of stocks that would make you salivate if they hit your price target. I’ve got a few on my “Buy” list in the energy sector, and today I’m going to share two of my favorites with you. A Major Opportunity The first is oil major, British Petroleum ( BP ), which began a mini-correction of its own about a month ago . . .  when the Russians decided to annex Crimea. You see, BP is now a major stakeholder in Russia’s state-controlled oil company, Rosneft. Last year, the Russian oil company bought BP’s half of TNK-BP for billions in cash and a stake in Rosneft that’s worth billions more. So when tensions rose between Russia and Ukraine, the spotlight was suddenly on BP’s connection . . .  and, as usual, investors sold first, then asked questions later. That’s good news for us because, if anything, the situation in Russia and Ukraine will sustain volatility in the oil markets and keep prices higher. That means BP’s stake is worth the same or even more, not less. If no one was buying Russian oil, then perhaps there’d be cause for worry. But, the opposite is true. BP also pays a hefty dividend of close to 5%. The fact that BP can pay such a high dividend – after spending tens of billions of dollars on the Gulf of Mexico incident – is a testament to the strength of the company’s operations and the value of its assets. So keep an eye out, as BP would be a stellar pickup in the low $40s. A Natural Choice My next pick, Noble Energy, Inc. ( NBL ), continues to pick up steam and grow its earnings and reserves. Noble has operations worldwide, from the shale-rich regions in the United States, to the massive gas fields off the coast of Israel and Cyprus, where it has rights to drill. It’s producing prolific amounts of gas in the Mediterranean, and that could end up being the “anti-Russia” play of the decade. You see, Russia supplies most of Europe’s natural gas right now, and that puts it in the catbird seat as far as economic leverage and price control. However, Noble is working hard at trying to change that. It’s in negotiations with Australian company, Woodside Petroleum ( WPL ), to develop LNG export facilities that would get gas to Europe and penetrate the Russian shield. Pipeline construction projects are in the works, as well. That makes Noble a great pickup in the high $50s to low $60s. Bottom line: As investors, we must be prudent with our hard-earned dollars. Right now that means taking advantage of a correction, rather than fearing it. Corrections are like sales right after the holidays… something to look forward to when you’re seeking values and bargains! And “the chase” continues, Karim Rahemtulla The post How to Survive the Coming Correction appeared first on Wall Street Daily .
    MIT “Accidently” Reveals An Enormous American Secret
  • by , 3 hours ago
  • tags: GOOG TSLA ILMN
  • Submitted by Wall St. Daily as part of our contributors program MIT “Accidently” Reveals An Enormous American Secret MIT Technology Review just published its list of the world’s “50 Smartest Companies.” The list is strictly a reflection of the companies having the biggest market impact through the sheer force of genuine innovation alone. MIT’s list wasn’t concerned with which companies are 1) growing the fastest, 2) have the highest sales, or 3) tout the best stock performance. The list is solely concerned with which companies are the “smartest.” And while I never agree with all 50, it’s always an enlightening article, as you can imagine. But what’s even more interesting is the storyline BEHIND the list . . . You see, as part of the economic recovery, there’s a secret revival afoot. One that other analysts and the press aren’t shrewd enough to realize is happening. An “Accidental” Revelation . . . To begin my yearly analysis of MIT’s list, the first thing I did was classify the companies by sector and industry. No sweat, right? Well, what I wasn’t expecting to find was the following . . . Of the “50 Smartest Companies” in the world, 27 of them could easily be considered manufacturers. As for the remaining companies on the list? They’re ALL making significant technological breakthroughs to reduce the cost to manufacture goods in the United States. Do you realize what this means? Manufacturing is making a big comeback! I honestly can’t think of any better news to report on an otherwise ho-hum Tuesday. This secret manufacturing revival bodes extremely well for both America’s economic future and stocks. Manufacturing is essential for many reasons. According to the U.S. International Trade Commission and the Department of Commerce, manufactured products account for over 80% of the country’s exports. Likewise, the presence of manufacturing facilities has a tremendous trickledown effect as a jobs multiplier. It’s estimated that there are four to five new jobs created for every ONE manufacturing job. The emergence of cheap natural gas is factoring into the secret revival, as well. All new U.S. manufacturing plants are being outfitted to benefit from the low cost of gas, which I expect to lead to the construction of even more plants. I’m telling you, this is really exciting! Still don’t believe me? Well, the top three companies on MIT’s list give us all the proof we need. World’s Smartest Company #1: Illumina, Inc. ( ILMN ) San Diego-based Illumina is the market leader for analyzing DNA. Specifically, it develops, manufactures and markets integrated systems for large-scale genetics analysis. Through innovation and strategic acquisitions, the company has vastly reduced the time it takes to crack a living tissue’s genetic code. It’s also ingeniously shrunk the costs involved, too. Illumina is a profitable company with revenue of $387 million. While the current P/E is a bit high at 69, the market is so immense that I expect earnings to increase even further. Buy on any dips. World’s Smartest Company #2: Tesla ( TSLA ) Backed by pure innovation, Tesla has overcome a ton of obstacles in order to design, construct and manufacture high-quality, battery-operated automobiles. Since the metrics say that demand is ramping up, I flew to California to verify it myself. (Spreadsheets will never tell you everything.) Sure enough, I noticed a fair number of Teslas on the road. More importantly, though, shopping malls with parking spaces equipped with free charging stations are popping up everywhere. Still, though… in order to sell more cars, Tesla must get its sticker price down to the $30,000 range. Management has a plan to do it, too. But can it execute? The plan calls for construction of a new Tesla manufacturing facility to produce the all-important battery system for the car. While I’m not convinced this alone makes the stock a “Buy,” I love that it will add 400 to 500 jobs to the economy. World’s Smartest Company #3: Google ( GOOG ) Google keeps pushing to increase revenue beyond the internet’s borders. Even though it hasn’t been successful yet, the creation of Google Glass and the recent acquisition of Nest Products could change all of that. I was lucky enough to get my hands on a developmental version of Google Glass, and I’ll concede that it’s really cool. But under the old adage that “pioneers get slaughtered and settlers prosper,” these glasses aren’t ready to change the world anytime soon. And Google likely won’t be the company to ultimately win this niche of the market. What about Google’s addition of Nest’s wireless smoke detectors and thermostats? Well, they’re almost as cool as the glasses. (Even I plan to have them installed in my home. I mean, who doesn’t want to adjust the room temperature from a smartphone, right?) But Nest’s boost to Google’s revenue is way too small to impact shares of such a behemoth company. But no worries . . .  in tomorrow’s issue, I’ll reveal my favorite company on MIT’s list of 50. Every portfolio should have at least a few shares! Until then! Onward and upward, Robert Williams Founder, Wall Street Daily The post MIT “Accidently” Reveals An Enormous American Secret appeared first on Wall Street Daily .
    Dividend Sonar Report – April 14, 2014
  • by , 3 hours ago
  • tags: HCT PG MMM
  • Submitted by  Wall St. Daily as part of our  contributors program   Dividend Sonar Report – April 14, 2014 .content_lists li { padding-bottom: 10px; } /* Generic Styling, for Desktops/Laptops */ table.report_table { width: 750px; border-collapse: collapse; } /* Zebra striping */ #report_table tr:nth-of-type(odd) { background: #eee; } #report_table th { background: #EDF2F7; color: #000; font-weight: bold; } #report_table td, #report_table th { padding: 6px; border: 1px solid #ccc; text-align: center; } #report_table tr td span, #report_table tr th span{ font-size: x-small; } table.report_table td a span { color: #0253b7; } table.report_table td a { text-decoration: none; } -->   First Busey ( BUSE ) is an Illinois-based bank holding company. This is the company’s first dividend increase since the credit crisis. HB Fuller ( FUL ) is a specialty chemicals producer that makes adhesives, sealants, coatings and paints. The company has increased its dividend payout for 45 consecutive years. While a 20% dividend increase is nice, the stock’s 1.1% forward yield is still underwhelming. Chatham Lodging Trust ( CLDT ) owns upscale extended-stay, select-service and full-service hotels. This is the company’s first dividend increase since instituting a monthly dividend at the beginning of 2013. Marcus Corp. ( MCS ) is a lodging and entertainment company. Marcus Theatres is the fifth-largest theatre circuit in the United States, with locations in major markets in the Midwest. This is the company’s first dividend increase since 2007. Procter & Gamble ( PG ) raised its dividend payout by 7%, equaling the increases in 2013 and 2012. This S&P 500 Dividend Aristocrat has increased its dividend for 58 consecutive years. Enterprise Products Partners ( EPD ) operates 50,000 miles of natural gas, NGL crude oil and petrochemical pipelines. This dividend increase marks the company’s 39 th consecutive quarterly distribution increase. Irregular Dividend Payouts Dividend Initiations T icker Name Market Cap (Billions) Dividend Declaration Date Dividend Dividend Yield HCT American Realty Capital Healthcare Trust $1.9 04/09/2014 $0.05666 6.6%   American Realty Capital Healthcare Trust ( HCT ) declared its first dividend since going public earlier this month. The formerly non-listed real estate investment trust (REIT) owns a diversified portfolio of 114 healthcare-related real estate properties, focusing predominantly on medical office buildings and senior housing communities. Dividend Action Watch T icker Name Tentative Dividend Declaration Date CSX CSX Corp 04/15/2014 SO Southern Co/The 04/15/2014 FRME First Merchants Corp 04/16/2014 HBAN Huntington Bancshares Inc 04/16/2014 FRC First Republic Bank 04/16/2014 PAG Penske Automotive Group Inc 04/17/2014 PPG PPG Industries Inc 04/17/2014 SON Sonoco Products Co 04/17/2014   Source: Dividends & Income Daily Research, Bloomberg The post Dividend Sonar Report – April 14, 2014 appeared first on Wall Street Daily .
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    Feeble Presence In Mobile Search Will Adversely Impact Travelzoo
  • by , 22 hours ago
  • tags: TZOO PCLN EXPE TRIP
  • Travelzoo (NASDAQ:TZOO) is slated to release its earnings for the first quarter of 2014 on Thursday, April 17. A healthily growing travel business helped the company to pump its top-line up by 5% to $158.2 million in 2013. However, the company struggled with its search business through the year as it had to lower investments into the division in order to build a new hotel booking platform. Search revenue declined by over 10% to $24 million in 2013. Travelzoo is presently conducting a performance review of its SuperSearch product and has brought new executives on board to devise the future strategy for search. We expect to see continued weakness in search in Q1 as the company’s efforts to revive the business will take time to ramp. We also expect operating margins to remain under pressure due to continued investments in building the hotel platform. Travelzoo’s EBITDA margin fell by over 3 percentage points to 18.1% in 2013 owing to a $3.1 million investment in the platform. We will update our $24.41 price estimate for Travelzoo after the upcoming quarterly results are announced. See our complete analysis of Travelzoo’s stock here Hotel Booking Platform Will Start Bringing In Revenues From This Year The primary agenda behind building the new platform is to reduce the friction associated with hotel bookings. The platform will allow users to book quickly and easily within Travelzoo’s websites and mobile products, thus also allowing suppliers to promote deals in a more flexible manner; e.g. loading a last minute rate for a hotel will become much easier compared to Travelzoo’s current solution, which redirects users to the hotel’s website. The hotel platform is presently in its beta testing phase with the roll out expected across all devices later this year. Since revenue is recognized when the stay occurs and not when the booking occurs, the platform will start generating revenue in the second half of 2014. The company has already increased its headcount ahead of the platform’s launch. During the earnings call, management conveyed that it will now start allocating more resources towards subscriber marketing. We believe that Travelzoo’s entry in hotel bookings is a good long term strategy, as it opens up an additional revenue opportunity for the company. In our view, Travelzoo’s growth will accelerate as the platform grows its scale by attracting more subscribers and advertisers. To learn more on how the hotel booking feature can drive Travelzoo’s growth, read our article:  Travelzoo’s Hotel Booking Feature Can Help Drive Big Growth Travelzoo Needs To Aggressively Target Mobile To Revive Search Travelzoo’s search products include SuperSearch, a pay-per-click travel search tool, and Fly.com, a travel search engine that allows users to find the best prices on flights from different airlines and online travel agencies (OTAs). Fly.com completed the first full quarter of its mobile site in Q4 last year. It processed about 750,000 searches in its first quarter of business. However, it does not have any mobile app. This led the average number of monthly searches on Fly to decline from 3.5 million in 2012 to 3.3 million in 2013. The number of monthly searches on SuperSearch also plummeted from 5.1 million to 4.1 million contemporaneously since the brand has neither a mobile app nor a mobile site. SuperSearch and Fly also faced the brunt of rising traffic acquisition costs and the need to balance spending which forced Travelzoo to decrease investments into search. The company is considering whether to reposition, terminate or merge SuperSearch with Fly. It is also focusing on driving profitable growth, which could result in a revenue decline of about $1.5 million from SuperSearch in Q1 2014 compared to the year-ago period. Travelzoo has stated that the hotel platform will be its key focus area in 2014, and thus, we think that it may not significantly increase its investments on search to bolster growth. About 66% of Travelzoo’s revenues are generated in the U.S. Future growth in the U.S. search sector is expected to come from mobile. According to eMarketer, about 2% of the digital ad spending on search in 2010 occurred on mobile devices. This was expected to reach 22% last year, and eMarketer forecasts that the figure will cross the 50% mark by 2017. In line with this trend, search engines are increasing their focus on mobile devices to attract traffic. We believe that Travelzoo needs to heavily invest in building mobile products and modernizing its search offerings. The company has $66 million in cash on its balance sheet with no debt. It could utilize the cash or raise money through the debt channel to invest into mobile search. See More at Trefis |  View Interactive Institutional Research (Powered by Trefis)
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    BlackBerry May Exit Devices Business If It Remains Unprofitable
  • by , 22 hours ago
  • tags: BBRY AAPL GOOG SSNLF MSFT
  • BlackBerry (NASDAQ:BBRY) CEO John Chen is looking to get the company more focused on software and services while reducing its reliance on smartphones, as part of a turnaround strategy that he thinks will take about two years to show results. The company is seeing deep market share losses on the devices front, with BlackBerry smartphone shipments last quarter dropping by nearly 80% year-over-year. In order to reduce its exposure to the mobile device market and mitigate inventory risk, Blackberry entered into a 5-year strategic partnership with Foxconn to manufacture its smartphones late last year. More recently, it tapped Wistron to initiate a new production run of the popular BB7 device, Bold, for worldwide distribution. By outsourcing a large chunk of its hardware business, BlackBerry wants to enhance the division’s profitability while focusing its in-house resources on more strategic goals of driving revenue growth in enterprise services and BBM. By our estimates, BB software and services account for about 45% of its overall value.
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    Union Pacific’s Earnings Preview: Volume Growth May Offset High Operating Costs
  • by , 23 hours ago
  • tags: UNP NSC CSX
  • Union Pacific Corporation (NYSE:UNP), one of the leading railroad networks in the U.S., will report its first quarter 2014 results on April 17, 2014. We believe that volume growth and pricing gains will be a major factor driving earnings in the first quarter and countering the negative effects of high operating costs incurred due to the harsh winter weather. In the previous quarter, the company reported a 7% gain in revenue driven by strong pricing gains and modest volume growth. Declining coal shipments impacted overall volumes for Union Pacific throughout 2012 and 2013. However, the trend seems to have reversed in the first quarter of 2014 with growth in coal volumes. This should more than offset the decline in automotive shipments, which have been severely impacted by the harsh winter weather. Agricultural, industrial, intermodal and chemicals shipments will also grow in the first quarter, however, somewhat tempered due to the bad weather. Union Pacific’s operating ratio (operating expenses expressed as a percentage of revenues), may be impacted by the high operating costs incurred during the quarter. We believe that pricing gains combined with volume growth may be able to offset the high operating costs and may prevent the operating ratio from deteriorating. See our complete analysis of Union Pacific here Revisiting Q4 2013 Results Union Pacific posted overall volume growth of 2% in the fourth quarter 2013, despite a significant decline of 10% in coal shipments, supported by strong growth in agricultural, automotive, and industrial products shipments. Union Pacific’s total revenue in the fourth quarter grew 7% year on year to reach $5.6 billion, driven by strong pricing gains and volume growth. Operating expenses increased 4% compared to the fourth quarter of the previous year. However, when expressed as a percentage of revenue, the ratio declined from 67.1% to 65%. This indicates an increase in Union Pacific’s efficiency in managing its operating expenses. Union Pacific is targeting to bring the ratio down to sub-65% levels by 2017. Bad Weather Causes Performance Metrics To Dwindle Leading To Increase In Costs Union Pacific’s performance metrics, such as terminal dwells and velocity, have performed badly due to the severe weather. Terminal dwell, which indicates the average time a freight car resides in a terminal, has increased 13% year over year and average car velocity has decreased 9%, both unfavorable directions of change which will impact operational costs. Union Pacific has had to increase crew and equipment count in order to facilitate smooth functioning of its services amidst the severe weather conditions. This will lead to higher labor costs, rental expenses and fuel costs for the quarter which will significantly impact operating costs and operating ratio. Coal Business May Turnaround Union Pacific’s coal shipments declined 10% in the fourth quarter of 2013. However, coal shipments are expected to improve in the first quarter 2014 due to increased price of natural gas and easier comparison to last year’s heavily depressed volumes. Lately, natural gas prices have risen due to increasing demand and the harsh winter weather this season. This has eroded the price advantage that natural gas had over coal. In the first quarter 2014, Union Pacific’s coal shipments grew 7% year over year. Coupled with pricing gains, we believe that the segment may post high single digit growth in revenues. Agricultural Shipments Revenue Will Continue To Grow In The First Quarter In the previous quarter, Union Pacific’s agricultural shipments increased by 13% resulting in a 19% increase in revenue. We expect to see growth in agricultural revenue in the first quarter 2014 primarily due to the spillover effects of the strong harvest last year which boosted agriculture shipments. Corn production grew from 273 million tons in 2012 to 355 million tons in 2013 and Soybeans production grew from 82.5 million tons in 2012 to 88.6 million tons in 2013. This increase in production has driven Union Pacific’s grain shipments, which includes corn and soybean, by 38% in the first quarter. Easier year on year comparisons will also have a favorable impact on agricultural shipments. Intermodal Shipments To Post Modest Growth Union Pacific’s intermodal revenue remained stagnant in the fourth quarter 2013 due to declines in revenue per car because of lower fuel surcharges, which offset modest growth in intermodal volumes. Volume of intermodal shipments increased 4% in the first quarter. Revenue per car may increase due to increase in fuel surcharge driven by the rise in diesel prices over the quarter. Diesel prices increased from $3.8 per gallon in December 2013 to $4.0 per gallon in March 2014. Volume growth coupled with increase in revenue per car may help the segment post modest growth in revenue. Construction and Shale Related Volumes Will Help Growth In Industrials Shipments In the fourth quarter 2013, Union Pacific’s industrials shipments grew 9% on increased shale related volumes and construction material and lumber shipments. The shale gas boom in North America continues to drive demand for frac sand, finished pipes and other drilling commodities. Shale related volumes along with crude oil accounted for 4.5% of Union Pacific’s overall volumes in 2013, and we expect the number to increase in the first quarter and throughout 2014 with continued growth in shale related activity. Union Pacific’s lumber & wood products and crushed stone, gravel and sand shipments are used for commercial, residential and government construction activity. In the first quarter 2014, lumber & wood products shipments grew 2% and crushed stone, gravel and sand shipments grew 15% due to an increase in the overall construction spending in the U.S. Spending on construction increased from $928 billion in November 2013 to $945 billion in February 2014. Growth in shipments of construction material will help drive revenues for Union Pacific’s industrial shipments segment. Revenue From Automotive Shipments May Decline The growing U.S. auto industry had a positive impact on Union Pacific’s automotive shipments throughout 2013. However, automotive shipments declined 4% in the first quarter 2014 due to the impact of the bad winter weather. Revenue from the segment, which accounts for 10% of the overall revenue, may suffer unless offset by pricing gains. See More at Trefis | View Interactive Institutional Research (Powered by Trefis)
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