Railroads Weekly Review: Norfolk Southern, CSX and Union Pacific
It was a good 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), seeing positive growth momentum. This is important because railroad stocks had recently come under pressure because of the continued decline in oil price. We believe that growth in shipments of grains, petroleum products, chemicals, and intermodal should help drive stock price in the near future.
Norfolk Southern
Norfolk Southern’s carloading report for the week ending December 20 revealed a 6.5% year-on-year increase in year-to-date grain shipments. [1] Norfolk Southern’s crushed stone, sand and gravel carloads grew 15%. Its petroleum products and chemicals carloads grew 30% and 1%, respectively, on growing production of crude oil in the U.S. Intermodal carloads increased 8% over the same period.
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Norfolk Southern’s stock gained around 2.2% over the week through Wednesday. 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 $6.44 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 December 20 was its year-to-date petroleum products carloads, which have grown 62% compared to the same period in the previous year. Its grain shipment increased 11% and grain mill products carloads grew 5.5%. The report also revealed a 6% increase in intermodal shipments. [2] Carloads of crushed stone, sand and gravel increased 9% on growing construction activity in the U.S.
CSX’s stock gained more than 2.2% over the week through Wednesday. We currently have a price estimate of $28 for CSX. We estimate revenues of $12.6 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 26% during this year. Intermodal carloads grew 8% and chemicals carloads grew 4%. [3] Carloads of crushed stone, sand and gravel increased 21% on growing construction activity in the U.S. 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 7% increase in quarter-to-date petroleum products carloads.
Union Pacific’s stock gained more than 1.5% 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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- Norfolk Southern Carloading Report, www.nscorp.com [↩]
- CSX’s 2014 Week 51 Cardloading Report, www.csx.com [↩]
- Union Pacific’s 2014 Week 51 Cardloading Report, www.up.com [↩]