Class I Stock Discussion

Rough day: BostonGlobe.com

Stocks extend losses as railroads sink industrial companies

Stocks extended their losses into a second day on Wednesday as railroad operator CSX had its biggest drop in 11 years, pulling other industrial companies down with it. Banks also fell as investors worried that lower interest rates will hurt their profits going forward. Investors expect the Federal Reserve to cut interest rates for the first time in a decade at their next policy meeting in two weeks. The yield on the 10-year Treasury fell to 2.05 percent from 2.12 percent late Tuesday as investors headed for less risky holdings. CSX plunged 10.3 percent after saying it now expects its revenue to decline as much as 2 percent this year, after previously saying it expected growth. Investors read that as trouble for the entire industry and sent the stocks of other railroad operators lower. Union Pacific sank 6.1 percent and Norfolk Southern dropped 7.5 percent.
...

The Wall Street Journal reports that railroad carloadings remain depressed with much of the blame attributed to trade wars and the continued displacement of coal as economy's primary energy source.

Fair Use:

Until recently, the train business was more than chugging along.

An industrywide move to implement “precision-scheduled railroading”—a system for trimming down wait times and boosting cargo efficiency devised by late railroading savant Hunter Harrison —led to widespread improvements in recent years. This model has been a boon for shareholders of America’s big listed railroads: Union Pacific , Norfolk Southern and CSX .

But the momentum from this transition is now fading. Old business lines like coal transport are slowly going away, and competition from trucking is on the rise. What’s more, if prolonged trade tensions weigh on economic growth, efficiency improvements could help rail operators get through it, but revenue declines will still be painful.

https://finance.yahoo.com/news/3-stocks ... 00594.html

3 Stocks to Watch From the Flourishing Railroad Industry
...
-Canadian National: Based in Montreal, Canada, Canadian National is involved in rail and related transportation business. CNI’s efforts to reward its shareholders via dividends and buybacks are encouraging and highlight the company's financial strength. In January, the company announced an 8% dividend hike. Strong cash flow generating-ability supports Canadian National's shareholder-friendly activities. The company is also benefiting from higher export volumes of Canadian grain. CNI has surpassed the Zacks Consensus Estimate in one of the last four quarters (missing the mark in the other three).
...
-Canadian Pacific: The company is being well-served by the uptick in revenues at key sub-groups like Grain, Potash, Forest products, Metals, minerals and consumer products, Automotive and Intermodal. We are encouraged by the Canadian Pacific’s decision to pay dividends even in the current uncertain scenario.

Canadian Pacific has an encouraging track record with respect to earnings surprise, having surpassed the Zacks Consensus Estimate in two of the past four quarters (missing the mark in the other two).
...
-CSX: Based in Jacksonville, FL, CSX offers rail-based freight transportation services like traditional rail service, transport of intermodal containers and trailers apart from rail-to-truck transfers.

CSX’s top line is benefiting from higher export coal volumes, domestic intermodal shipments and volume growth in other segments, as well as pricing gains. High export coal prices and fuel surcharge revenues are expected to bolster the top line in the near term. CSX is trying to drive growth by reducing operating expenses. Efforts to reward its shareholders also bode well.

CSX has a stellar track record with respect to earnings surprises. The company surpassed the Zacks Consensus Estimate in two of the past four quarters (in line with the mark in the remaining two quarters), with an average beat of 4.64%.
...

https://ca.finance.yahoo.com/news/cn-vs ... 00873.html

CN vs. CP Rail: Which Is the Better Transportation Stock for Canadian Investors Heading Into 2025?

Written by Joey Frenette at The Motley Fool Canada
...
At the end of the day, trucks cannot step in for the top rails when bulk shipments need to go from one coast to another. Either way, let’s have a closer look at Canada’s top two rail stocks to see which, if either, is a tempting buy on recent weakness for 2025 and beyond.

It’s been a forgettable year for both railways, but as Canada’s economy and the TSX Index attempt to heat up in the new year, perhaps value investors may wish to give the following names a second look while they’re still down and out.
...

As I have noted over at a Worldwide Forim topic, IF the incoming Trump administration follows through on their proposal to eliminate the Free Trade Zone, by the imposition of tariffs, that comprises North America, CPKC stands to be far more adversely affected than CN.

CPKC's business plan, exemplified by merging with KCS and acquiring much of the MILW is built around building a "T" , with the "crossbow" being the heritage CP, and the "trunk" extending Southward with the MILW, KCS, and their sub KCS-M through the US, the manufacturing localities within Mexico (Monterrey, Saltillo, and on to the maritime port of Lazaro Cardenas, Mich. The imposition of tariffs will indeed hurt.