Railroads Weekly Review: Norfolk Southern, CSX and Union Pacific

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It was a great week for the U.S. railroad industry, with the stocks of three major railroads, Norfolk Southern (NYSE:NSC), CSX (NYSE:CSX), and Union Pacific (NYSE:UNP), hitting new 52-week highs. There has been a lot of positive momentum in the railroad industry, as shipment volumes continue to rise. Much of the growth is being fueled by agricultural and crude oil shipments. Intermodal services are also gaining popularity due to a sharp decline in trucking capacity.

Norfolk Southern

Norfolk Southern’s carloading report for the week ending November 22 revealed a 6.1% year-on-year increase in year-to-date grain shipments. [1] Norfolk Southern’s petroleum products and chemicals carloads grew 26.5% and 0.7% respectively. Intermodal carloads increased 6.0% over the same period.

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Norfolk Southern’s stock gained slightly over the week. We currently have a price estimate of $95 for Norfolk Southern. We estimate revenues of $11.9 billion, compared to a consensus estimate of $11.8 billion, and EPS of $6.57, compared to consensus estimate of $6.48 for this year.

Click here to see our complete analysis of Norfolk Southern.

CSX’s Carloading Report

The highlight of CSX’s carloading report for the week ending November 22 was its year-to-date petroleum products carloads, which have grown 64.9% compared to the same period in the previous year. Its chemicals carloads increased 2.4%. The report also revealed a 4.2% increase in intermodal shipments. [2] CSX’s year-to-date grain carloads grew 11.5%.

CSX’s stock gained around 0.9% over the week through Wednesday. We currently have a price estimate of $28 for CSX. We estimate revenues of $12.63 billion and EPS of $1.87, roughly in line with consensus estimates.

Click here to see our complete analysis of CSX.

Union Pacific

Union Pacific’s grain carloads have shown the most growth of the three railroads, rising 29% during this year. Intermodal carloads grew 8% and chemicals carloads grew 4%. [3] It is interesting to note that there was a 6% decline in its year-to-date petroleum products carloads. Union Pacific’s petroleum products carloads have been struggling through the year due to narrow spreads between Western Texas Intermediate (WTI), produced in the US, and Brent crude oil, which is sourced from the North Sea. However, it seems that carloads have picked up in the fourth quarter, as indicated by the 9% increase in quarter-to-date petroleum products carloads.

Union Pacific’s stock gained around 1.2% over the week through Wednesday. We currently have a price estimate of $97 for Union Pacific. We estimate revenues of $23.8 billion, compared to consensus estimate of $23.9 billion, and EPS of $5.51 for this year, compared to consensus estimate of $5.62.

Click here to see our complete analysis of Union Pacific.

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Notes:
  1. Norfolk Southern Carloading Report, www.nscorp.com []
  2. CSX’s 2014 Week 47 Cardloading Report, www.csx.com []
  3. Union Pacific’s 2014 Week 47 Cardloading Report, www.up.com []