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U.S. Rails Skid Into Bear Market on Triple Whammy Cargo Slump
Author: Taxpayer
Date: 06-29-2015 - 12:15
[www.bloomberg.com]
U.S. railroads, Wall Street favorites for much of the past decade, are slumping into a bear market amid a three-way squeeze from plunging coal, crude-oil and grain shipments.
An index of the four largest publicly traded U.S. carriers has dropped 20 percent from its peak in November, paced by Kansas City Southern, as the companies struggle to offset the loss of volumes. They haven’t tumbled this much since 2011.
Those difficulties are likely to drag on, leading to the first annual industrywide earnings decline since 2009, as low natural gas prices sap coal demand, U.S. oil drilling slows and harvests return to normal after a record crop. That threatens to crimp a rally that made the group one of the top performers in the Standard & Poor’s 500 Index.
“It’s going to be a tough year,” David Vernon, a Sanford C. Bernstein & Co. analyst, said in a telephone interview after publishing a note last week whose title predicted second-quarter profit reports that would be “Dark and Full of Terrors.”
Earnings per share for the largest U.S. railroads -- the other three are Union Pacific Corp., CSX Corp. and Norfolk Southern Corp. -- will fall 0.6 percent in 2015, based on analysts’ estimates compiled by Bloomberg. Last year, they gained 19 percent. Analysts predict revenue will drop 2.8 percent this year after jumping 6.7 percent in 2014................................
U.S. railroads, Wall Street favorites for much of the past decade, are slumping into a bear market amid a three-way squeeze from plunging coal, crude-oil and grain shipments.
An index of the four largest publicly traded U.S. carriers has dropped 20 percent from its peak in November, paced by Kansas City Southern, as the companies struggle to offset the loss of volumes. They haven’t tumbled this much since 2011.
Those difficulties are likely to drag on, leading to the first annual industrywide earnings decline since 2009, as low natural gas prices sap coal demand, U.S. oil drilling slows and harvests return to normal after a record crop. That threatens to crimp a rally that made the group one of the top performers in the Standard & Poor’s 500 Index.
“It’s going to be a tough year,” David Vernon, a Sanford C. Bernstein & Co. analyst, said in a telephone interview after publishing a note last week whose title predicted second-quarter profit reports that would be “Dark and Full of Terrors.”
Earnings per share for the largest U.S. railroads -- the other three are Union Pacific Corp., CSX Corp. and Norfolk Southern Corp. -- will fall 0.6 percent in 2015, based on analysts’ estimates compiled by Bloomberg. Last year, they gained 19 percent. Analysts predict revenue will drop 2.8 percent this year after jumping 6.7 percent in 2014................................
U.S. Rails Skid Into Bear Market on Triple Whammy Cargo Slump