Railroads Weekly Review: Norfolk Southern, CSX, Union Pacific

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Railroad stocks saw some stability last week, after having declined significantly in the week before due to lowered revenue guidance from Kansas City Southern. Investors have been concerned about energy sector volumes, which include commodities such as coal, coke, and crude oil. In this review, we take a look at carloads of Norfolk Southern (NYSE: NSC), CSX (NYSE: CSX), and Union Pacific (NYSE: UNP), for the quarter to date ended May 16, with a particular focus on their energy related commodities.

Norfolk Southern

According to Norfolk Southern’s carload report, its coal carloads maintained their decline of 19% year-on-year from the previous week in to the quarter to date ended May 16. [1] Coke carloads were up 6.5% in the quarter to date May 16, compared to 5% in the quarter to date May 9. Norfolk Southern’s petroleum products carloads, which includes crude oil, were up 33% in the quarter to date May 16, compared to 36% in the quarter to date May 9. In the week ended May 16, intermodal volumes grew 4%, compared to 3% in the week ended May 9.

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We currently have a price estimate of $100 for Norfolk Southern. For 2015, we estimate revenues of $11.4 billion, compared to a consensus estimate of $11.1 billion, and EPS of $6.30, compared to a consensus estimate of $5.90.

Click here to see our complete analysis of Norfolk Southern.

Union Pacific

Union Pacific’s petroleum products carloads declined 4% year-on-year in the quarter to date May 16, compared to 6% year-on-year in the quarter to date May 21. [2] Its coal carloads declined 25% in the quarter to date May 16, while coke carloads were up 23%. Now that the labor contract negotiations between the ILWU and PMA have ended and a formal contract has been signed, Union Pacific’s intermodal carloads have recovered, with a 5% increase during the quarter to date May 16.

Union Pacific’s stock gained 1.1% over the week through Thursday. We currently have a price estimate of $104 for Union Pacific. For the year 2015, we estimate revenues of $24.4 billion, compared to consensus estimate of $24.0 billion, and EPS of $6.30, compared to a consensus estimate of $6.25.

Click here to see our complete analysis of Union Pacific.

CSX

CSX’s coal carloads declined 10% year-on-year in the quarter to date May 16, compared to 11% year-on-year in the quarter to date May 9. [3] Coke carloads were down 17% in the quarter to date May 16, compared to 18% in the quarter to date May 9. CSX’s petroleum products carloads were up 9% in the quarter to date May 16, consistent with the quarter to date May 9. Intermodal volumes grew 3% during the week ended May 16.

We currently have a price estimate of $30 for CSX. For the year 2015, we estimate revenues of $12.8 billion, compared to a consensus estimate of $12.5 billion, and EPS of $2.10, compared to a consensus estimate of $2.06.

Click here to see our complete analysis of CSX.

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Notes:
  1. Norfolk Southern Carloading Report, www.nscorp.com []
  2. Union Pacific’s 2015 Week 19 Carloading Report, www.up.com []
  3. CSX’s 2015 Week 19 Carloading Report, www.csx.com []