|Bid||138.22 x 900|
|Ask||143.55 x 800|
|Day's Range||140.17 - 143.22|
|52 Week Range||133.17 - 160.57|
|PE Ratio (TTM)||N/A|
|Beta (3Y Monthly)||1.08|
|Expense Ratio (net)||0.43%|
General Electric’s (GE) problems aren’t limited to the power business. The company’s Transportation and Legacy segment’s lighting division has also been in troubled waters for years. Intense competition and train budgetary cuts in several global economies are hurting transportation businesses’ revenues and margins.
General Electric (GE) registered its first gains yesterday after nine consecutive days of falling. Yesterday, the company announced it agreed to sell its Current lighting division to private equity firm American Industrial Partners (or AIP) for an undisclosed amount. The recently announced divestment is a part of GE’s massive business restructuring plan announced in June this year under which it plans to offload its struggling lighting business completely.
Eastern US rail giant CSX Corporation (CSX) posted 4.2% YoY (year-over-year) carload traffic growth in Week 42. The company hauled ~72,400 railcars sans intermodal units in the week compared to 69,500 units in Week 42 of 2017. Compared to US rail carriers’ 0.7% carload loss, CSX’s carload traffic reported much higher gains in the week.
In the third quarter, Norfolk Southern (NSC) recorded a 20% rise in its Intermodal segment’s revenue to $746.0 million from $621.0 million. The railroad company’s intermodal share of total revenue expanded 2% to 25.3% in the quarter from 23.3% in the corresponding period last year.
US industrial powerhouse General Electric (GE) announced its third-quarter earnings today before the market opened. The industrial giant’s adjusted EPS in the quarter were down 51.7% YoY (year-over-year) from $0.29 in Q3 2017. On a GAAP basis, GE reported a loss of $2.63 per share from GAAP continuing operations in the third quarter. The company’s revenue in the quarter was down 11.6% YoY from $33.4 billion in the third quarter of last year.
In this part, we’ll examine United Parcel Service’s (UPS) operating margins in the third quarter. Its adjusted operating margins contracted 70 basis points to 10.5% from 11.2%. The US Domestic Package segment’s reported operating income totaled $949.0 million, which equals $988.0 million on an adjusted basis in the third quarter.
The segment’s revenue growth resulted from the acquisition revenue net of divestiture, which helped its revenues rise 7.0%. This growth was driven by the Scott Safety acquisition from Johnson Controls (JCI). Higher sales volume and pricing increased the segment’s revenue growth by 2.2%.
Let’s discuss Reuters-surveyed analysts’ recommendations on General Electric (GE) and its peers. After the company update on October 1, analysts became less skeptical about its future course of action. Of the 20 analysts covering GE stock, four (20%) have recommended “strong buys,” whereas four (20%) have recommended “buys” on its stock.
In this article, we’ll consider analysts’ earnings estimates for General Electric (GE). Analysts expect GE to report adjusted EPS of ~$0.20, 31.4% lower than its adjusted EPS of $0.29 in the third quarter of 2017. After the company’s recent CEO replacement and its decision to write down $23.0 billion in its Power segment, analysts’ estimates went south.
Norfolk Southern (NSC), a major Eastern United States rail freight operator, announced its third-quarter earnings today before the market opened. The railroad’s adjusted EPS of $2.52 exceeded the Thomson Reuters–surveyed analysts’ estimate of $2.44 by 3.1%. The railroad’s third-quarter adjusted EPS rose 44.0% YoY (year-over-year) from $1.75 in the third quarter of 2017.
In Week 41, Canadian National Railway (CNI) recorded a ~5.7% YoY (year-over-year) increase in carload traffic. It moved ~66,400 railcars sans intermodal traffic in the week compared to ~62,900 units in the comparable period last year.
Honeywell International’s (HON) Aerospace segment is its largest revenue contributor. In the third quarter of 2018, its contribution expanded 1.3 percentage points YoY (year-over-year) to 37.4% of its revenue, from 36.1%. The segment reported revenue of $4.03 billion in the third quarter, implying a 10.2% growth YOY.
CSX (CSX) operates in the Eastern United States and competes with Norfolk Southern (NSC). In Week 41, it reported a carload traffic growth of 4.1% YoY (year-over-year). It carried ~71,600 railcars excluding intermodal units compared to 68,700 units in Week 41 of 2017. Compared with US rail carriers’ 0.4% carload gains, CSX reported much higher gains in the same category.
CSX (CSX) is covered by 25 analysts polled by Thomson Reuters. The railroad has a consensus rating of 2.15, indicating a “buy.” Seven analysts recommended a “strong buy” for CSX stock, and nine analysts recommended a “buy.” Eight analysts recommended a “hold,” and one analyst recommended a “sell” on CSX stock.
Kansas City Southern (KSU), the Class I railroad company that’s been in focus during the Trump presidency, announced its third-quarter earnings results before the market opened on October 18. The company’s adjusted EPS of $1.70 in the quarter were up 38.2% YoY (year-over-year) from $1.23 in the third quarter of 2017. KSU also did well amid network congestion in northern Mexico, which resulted in a difficult operating environment.
J.B. Hunt Transport Services (JBHT) has a consensus rating of 2.25, which reflects a “buy.” The company is covered by 24 analysts polled by Thomson Reuters. Notably, none of the analysts changed their recommendations for J.B. Hunt after its third-quarter results. Seven (29.2%) analysts recommended a “strong buy,” five (20.8%) recommended a “buy,” 11 (45.8%) recommended a “hold,” and one (4.2%) recommended a “sell.”
In the previous article, we saw analysts’ recommendations for Honeywell (HON). The latest report on September 28 suggests that Honeywell’s short interest remained under 1% of the outstanding shares. As per the latest report, HON’s short interest is at 0.78% of the outstanding shares, a decline of 12 basis points sequentially.
On October 15, North America’s major trucking giant J.B. Hunt Transport Services (JBHT) announced its third-quarter earnings after the market closed. The company reported an adjusted EPS of $1.47, which exceeded analysts’ estimate of $1.40 by 5%. The analysts were surveyed by Thomas Reuters. J.B. Hunt’s adjusted EPS in the third quarter rose 52% YoY (year-over-year) from $0.96 in the third quarter of 2017.
In Week 40, Kansas City Southern (KSU), the smallest Class I railroad company, reported an 8.7% YoY (year-over-year) fall in carload traffic. The railroad company carried ~24,600 railcars excluding intermodal units in the week compared to ~26,900 units in Week 40 of 2017. KSU’s carload traffic trended in the opposite direction of US railroad companies’ 0.7% YoY gains in the same category.
The analysts tracking 3M (MMM) seem to be increasing again. Currently, 17 analysts are actively tracking 3M. Analysts’ consensus on 3M indicates a target price of $211.50, which implies a marginal gain of 0.5% over the closing price as of October 9.
CSX (CSX), a major Eastern US railroad, reported 5.9% YoY (year-over-year) growth in week 39 carload traffic. The company moved ~73,100 railcars excluding intermodal units in the week compared to 69,000 units in the same period last year.
Railroads’ capital expenditure is based on their revenue. Higher capex may mean a railroad is confident about its future business outlook. Approximately 50%–60% of railroads’ capital expenditure goes toward maintaining freight cars, tracks, locomotives, bridges, tunnels, and other infrastructure and equipment. In 2017, ~19% of US railroads’ (IYJ) revenue had gone toward capex in the last ten years, while 3% of the average US manufacturer’s revenue had gone toward capex.
Kansas City Southern (KSU) remained the only Class I railroad company to report lower YoY (year-over-year) rail traffic in Week 38. However, KSU saw a 0.2% YoY gain in its carload traffic in the week.
US industrial output expanded 4.9% YoY (year-on-year) in August, marking the sharpest rise in US industrial production since December 2010. The rise in industrial output augurs well for the US railroad sector. According to the Association of American Railroads, US carload traffic was up 2% YoY (year-over-year), and intermodal traffic grew 6% YoY in the first 38 weeks of 2018.
Analysts’ interest in 3M (MMM) has been increasing in the past three months. Among the 17 analysts, 30% recommended a “buy,” 47% recommended a “hold,” and 23% recommended a “sell.”