OMAHA, Neb. (AP) — Three major U.S. freight railroads will release their first-quarter earnings reports soon, giving investors insight into whether coal demand has rebounded and on the health of the economy.
CSX Corp. will release its first quarter earnings on Tuesday. Union Pacific Corp., the largest U.S. freight railroad, will follow with its report on Thursday. Norfolk Southern Corp. will release its earnings report the following week, on April 23.
The other big U.S. freight railroad, BNSF, is owned by Warren Buffett’s Berkshire Hathaway Inc., which is expected to release results in early May.
WHAT TO WATCH FOR: Over the past couple years, railroad profits have been hurt by weak demand for coal. And agricultural shipments also suffered last year from the drought.
Improvement in the economy and housing construction last year, along with a surge in crude oil shipments, helped the railroads offset the lower coal volumes.
Coal carload numbers improved in March, according to Sterne Agee analyst Jeff Kauffman, so that may help first-quarter railroad profits. Moreover, that gain suggests that the decline in coal shipments may have finally bottomed out.
Jefferies & Co. analyst Peter Nesvold said investors will be focused on what the railroads expect for the rest of the year in terms of shipping demand and how much they’ll be able to increase shipping rates, especially for coal.
Investors who are trying to guess when coal volumes will improve may miss out on a good opportunity to invest in the railroads now, he said.
WHY IT MATTERS: Results from major freight railroads are considered gauges of the nation’s economic health. Railroads carry cars, chemicals, fuel, crops, lumber and containers of imported goods across the nation, so their earnings reflect conditions of many industries.
WHAT’S EXPECTED: Analysts surveyed by FactSet expect CSX, based in Jacksonville, Fla., to report earnings of 40 cents per share on revenue of $2.92 billion.
Union Pacific is forecast to report earnings of $1.96 per share on revenue of $5.22 billion.
Analysts expect Norfolk Southern, based in Norfolk, Va., to post earnings of $1.17 per share on $2.77 billion in revenue.
LAST YEAR’S QUARTER: CSX reported earnings of $449 million, or 43 cents per share, on revenue of $2.97 billion.
Union Pacific’s profit came to $863 million, or $1.79 per share, on revenue of $5.11 billion.
Norfolk Southern’s earnings jumped were $410 million, or $1.23 per share, on revenue of $2.79 billion.
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Online:
CSX Corp.: www.csx.com
Union Pacific Corp.: www.up.com
Norfolk Southern Corp.: www.nscorp.com
