Railroads Weekly Review: Norfolk Southern, CSX and Union Pacific

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Norfolk Southern

In this review, we will again be taking a look at carloads for major U.S. railroads – Norfolk Southern (NYSE: NSC), CSX (NYSE: CSX), and Union Pacific (NYSE: UNP). All three railroads continued to report declines across most commodities during the week ended February 28.

Norfolk Southern

Norfolk Southern’s carloading report revealed that its petroleum products, lumber and wood products and automotive carloads were in the positive during the week ended February 28. Petroleum product carloads increased 45% year-on-year during the week and 26% in the quarter to date. [1] Norfolk Southern’s intermodal volumes declined 8% during the week.

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Norfolk Southern’s stock remained stable over the week through Thursday. We currently have a price estimate of $105 for Norfolk Southern. For the year 2015, we estimate revenues of $11.9 billion, compared to a consensus estimate of $11.6 billion, and EPS of $6.84, in line with consensus estimates.

Click here to see our complete analysis of Norfolk Southern.

Union Pacific

Unlike Norfolk Southern and CSX, Union Pacific’s petroleum products carloads declined during the week ended February 28. [2] Narrow spreads between WTI and Brent crude oil, and high crude production in the PADD 3 regions have eaten into Union Pacific’s crude oil carloads, leading to a decline in its petroleum carloads. Carloads of grain, food products and chemicals were in the positive during the week. Union Pacific’s intermodal carloads declined 10% as a result of the extended labor contract negotiations between the ILWU and PMA.

Union Pacific’s stock declined around 1.6% over the week through Thursday. We currently have a price estimate of $105 for Union Pacific. For the year 2015, we estimate revenues of $25.3 billion, compared to consensus estimate of $25.0 billion, and EPS of $6.61, compared to a consensus estimate of $6.59.

Click here to see our complete analysis of Union Pacific.

CSX

Similar to Norfolk Southern, CSX’s petroleum products, lumber and wood products and automotive carloads were in the positive for the week ended February 28. [3] Petroleum product carloads grew 14% while coal carloads declined 32%, the heaviest of all commodities. CSX’s intermodal volume declined 9% during the week.

CSX’s stock declined 1.2% over the week through Thursday. This may have been due to the announcement that it expects to see a decline in its domestic coal volumes. We currently have a price estimate of $28 for CSX. For the year 2015, we estimate revenues of $13.0 billion, compared to a consensus estimate of $12.9 billion, and EPS of $2.16, in line with consensus estimates.

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 8 Cardloading Report, www.up.com []
  3. CSX’s 2015 Week 8 Carloading Report, www.csx.com []