150.85 0.00 (0.00%)
After hours: 4:23PM EDT
|Bid||149.76 x 800|
|Ask||151.70 x 1000|
|Day's Range||150.14 - 151.79|
|52 Week Range||103.37 - 151.79|
|PE Ratio (TTM)||10.45|
|Forward Dividend & Yield||3.20 (2.14%)|
|1y Target Est||N/A|
Wednesday’s temper tantrum, instigated by emerging markets but quickly joined by U.S. equities, failed to derail the transportation sector. Its muscle flexing has relative strength seekers flocking to its many constituents.
In this daily bar chart of UNP, below, we can see a pattern of higher highs and higher lows the past twelve months. The volume pattern is hard to interpret but the daily On-Balance-Volume (OBV) line shows a rising/bullish pattern for the most part. Prices made new highs in August but the OBV line has yet to confirm.
Previously, we discuss Berkshire Hathaway’s (BRK.B) BNSF (Burlington Northern Santa Fe) Coal segment’s performance. In this part, we’ll discuss the railroad’s operating margin performance in the second quarter.
Earlier, we reviewed Berkshire Hathaway’s (BRK.B) BNSF (Burlington Northern Santa Fe) Agricultural Products segment. In this part, we’ll discuss how the Coal segment performed. In the second quarter, BNSF’s coal revenues were $911.0 million—down 0.1% from $912.0 million in the second quarter in 2017.
Previously, we discussed Berkshire Hathaway’s (BRK.B) BNSF (Burlington Northern Santa Fe) Consumer Products segment. Now, we’ll assess the Industrial Products segment. In the second quarter, the segment’s revenues rose 16.3% YoY (year-over-year) to ~$1.5 billion from $1.2 billion in the same period last year.
In the previous part, we analyzed Berkshire Hathaway’s (BRK.B) BNSF (Burlington Northern Santa Fe) revenues. In this part, we’ll discuss the Consumer Products segment. In the second quarter, the Consumer Products segment’s revenues increased $237.0 million or 13.6% to $1.9 billion from $1.7 billion in the second quarter of 2017.
Berkshire Hathaway’s (BRK.B) BNSF (Burlington Northern Santa Fe) railroad operations are reported in four segments—Industrial Products, Consumer Products, Agricultural Products, and Coal. In the second quarter, BNSF’s total revenues were $5.8 billion—up 12% YoY (year-over-year) from $5.2 billion in the second quarter of 2017. Excluding non-rail logistics and accessorial revenues of $324.0 million, BNSF’s total freight revenues were $5.5 billion—up 11.1% YoY from $5.0 billion in the second quarter of 2017.
Of the 28 analysts covering Union Pacific (UNP) stock, 15 have recommended “buys,” 12 have recommended “holds,” and one has recommended a “sell.” Analysts’ target price of $155.84 is ~4% higher than UNP’s August 7 closing price of $149.88. Its business reorganization could increase its operating costs in the short term, but analysts expect it to expand its operating margin in the long term.
Union Pacific (UNP) is seeing solid earnings estimate revision activity and is a great company from a Zacks Industry Rank perspective.
Canadian National Railway (CNI) reported a 2.0% YoY (year-over-year) carload traffic gain in Week 30. The railroad moved 64,000 railcars excluding intermodal units in the week, compared to 62,700 railcars in the same period of the previous year. CNI’s total combined rail freight traffic was up 1.0% YoY in Week 30, whereas the US railroad (XLI) companies posted a 3.0% YoY increase.
Union Pacific Corporation (NYSE: UNP) customers sending freight east of the Mississippi have fewer options as the west's main rail line blames changes on the part of its eastern peer CSX Corporation (NYSE: CSX). The service changes stem directly from what UP calls "interline intermodal service changes" on the part of CSX.
In Week 30, Kansas City Southern (KSU), the smallest US Class I railroad, posted the second-highest weekly gains in total rail traffic. The company’s 6.2% YoY (year-over-year) gain in the week was just behind Canadian Pacific Railway’s (CP) 6.4% gain.
Canadian Pacific Railway (CP) and Canadian National Railway (CNI) stocks have been hit in 2018 due to NAFTA renegotiations. This has been reflected in their year-to-date returns as of August 6, which are lower than the returns of US-originated railroad companies (IYT) such as Union Pacific (UNP) and CSX Corporation (CSX). Canadian Pacific Railway’s Precision Scheduled Railroading model has benefited it in recent years, as has been evidenced by its higher operating margin compared to those of its Class I railroad peers.
On August 7, Canadian National Railway (CNI) closed at $88.31 on the NYSE. The stock’s 52-week high was $90.57, which was also a new all-time high. Among all Class I railroad companies, CNI has the highest investment by percentage in growth-driven capex.
CSX Corporation (CSX) went a step further and completely changed its rail operating model. This new operational turnaround model should help CSX achieve revenue growth on increased shipments and pricing gains from the intermodal and general merchandise segment.
In Week 30, Western US major railroad Union Pacific (UNP) witnessed 2.3% YoY (year-over-year) carload traffic growth. The railroad moved ~98,100 railcars excluding intermodal units in the week compared to ~95,900 in the corresponding week of 2017.
Now let’s look at Norfolk Southern (NSC), a major Eastern US railroad company. On August 3, NSC entered into an accelerated agreement with Bank of America and Goldman Sachs to buy back its common stock worth $1.2 billion. In the last week of July, Norfolk Southern announced an 11% increase in its quarterly dividend per share to $0.80 from $0.72.
BNSF Railway (BRK.B) reported a 4.5% YoY (year-over-year) increase in carload traffic in Week 30. During the week, the Western US major railroad company hauled ~103,300 railcars excluding intermodal compared to ~98,800 units in the corresponding period of 2017.
On July 31, Western US rail giant Union Pacific (UNP) saw its stock set a new all-time high of $151.50. In the last week of July, the company announced a 10% dividend rise, taking its dividend per share to $0.80 from $0.73.
The second-quarter earnings releases of major US railroad companies concluded with Genesee & Wyoming’s (GWR) earnings results, which it released on July 27. A quick look into these companies’ earnings reveals a vivid YoY (year-over-year) rise in rail freight volumes. For railroad companies, top line growth is primarily driven by volumes and pricing gains.
JetBlue (JBLU) raises non-fuel unit costs outlook for Q3 as well as the full year following the recent ratification of its pilot contract. This in turn, might hurt the bottom line in 2018.