The Zacks Analyst Blog Highlights: Canadian Pacific Railway, CSX, Union Pacific, Canadian National Railway & Norfolk Southern..
March 12 2012 - 4:30AM
Zacks
For Immediate Release
Chicago, IL – March 12, 2012 – Zacks.com announces the list of
stocks featured in the Analyst Blog. Every day the Zacks Equity
Research analysts discuss the latest news and events impacting
stocks and the financial markets. Stocks recently featured in the
blog include Canadian
Pacific Railway Ltd. (
CP), CSX Corporation ( CSX), Union
Pacific Corporation ( UNP), Canadian National
Railway ( CNI) and Norfolk Southern
Corporation ( NSC).
Get the most recent insight from Zacks Equity Research with the
free Profit from the Pros newsletter:
http://at.zacks.com/?id=5513
Here are highlights from Friday’s Analyst
Blog:
Railroads See Drop in Carloads
According to the weekly data for March 3, North American Rail
Freight Carloads continued to see results slide. Total carloads
declined 3.48% year over year to 373,530 units, mainly due to a
9.5% drop in trailers. However, Intermodal and Container
traffic remain healthy with 6.4% and 8.9% year-over-year growth,
respectively.
Commodity wise, rail freight for the week ended March 3
registered maximum declines in its coal volumes (15.2% year over
year) due to continued substitution with lower-priced natural gas
impacting utility coal volume.
On the other hand, Petroleum products remain strong, driven by a
22.5% year-over-year increase in carloads. The surging crude prices
remain attractive for railroads, especially in regions like North
Dakota that lack pipeline facility and rely more on rail freight
services.
Rail freight carriers like Canadian
Pacific Railway Ltd. ( CP) have
already begun to capitalize on these market opportunities by
expanding rail freight services. The company will be the only rail
freight to carry crude from the soon-to-begin oil terminal in North
Dakota's Bakken shale oil fields, carrying 35,000 barrels of oil
per day. The terminal construction is underway near Van Hook in
North Dakota by the U.S. Development Group, a Texas-based developer
of rail logistics and terminal facilities.
Going forward, the recovery in the growth in the North American
auto industry continues to bode well for Metal products, driving
growth of 18.5% year over year.
The current scenario of North American Rail Freight suggests a
strong momentum in freight prices rather than any significant
additions in freight volumes. Class I carriers
like CSX Corporation (
CSX), Union Pacific Corporation (
UNP), Canadian National Railway ( CNI)
and Norfolk Southern Corporation ( NSC)
continue to enjoy pricing discretion with an average pricing growth
of nearly 4%-5% per annum while maintaining double-digit profit
margin.
However, the on-going economic volatilities in the U.S. and
abroad may keep these railroads’ top-line growth under pressure in
the near future. Moreover, the near-term growth for these companies
will continue to be tempered by lower coal production, as
forecasted by the U.S. Energy Information Administration.
Lower natural gas prices, coupled with a weak utility coal
market have raised significant concerns. This is because utility
coal makes up roughly a third of total coal shipments. Strong
exports to Asian countries continue to remain a silver lining.
Currently we maintain a long-term Neutral recommendation on CSX
Corp., Union Pacific, Canadian National, Canadian Pacific and
Norfolk Southern. All these stocks carry a short-term (1-3 months)
Hold rating (Zacks #3 Rank).
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CDN NATL RY CO (CNI): Free Stock Analysis Report
CDN PAC RLWY (CP): Free Stock Analysis Report
CSX CORP (CSX): Free Stock Analysis Report
NORFOLK SOUTHRN (NSC): Free Stock Analysis Report
UNION PAC CORP (UNP): Free Stock Analysis Report
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