Railroad investors see plunging second-quarter profit at bottom
Railroad shipments are falling at the fastest pace since 2009, employees are getting furloughed and profits probably fell for the fifth straight quarter. Yet for investors the worst may already be over.
Investors are seeing signs of improvement for the second half of the year. While shipments slumped 8.2 percent during the quarter, the most in seven years, the rate of decline eased by about half in the last four weeks, according to data from the Association of American Railroads compiled by Bloomberg. Analysts are forecasting a return to profit growth by the final months of the year for the three largest carriers.
“People are willing to assume that this is the trough,” said Mark Levin, an analyst with BB&T Capital Markets in Richmond, Va. “As long as it’s not getting worse they’re not as concerned. They just want to see it get better.”
Since rail stocks bottomed in January, Omaha, Neb.-based Union Pacific has recovered more than 30 percent. Norfolk Southern, based in Norfolk, Va., has gained almost as much and Jacksonville, Fla.-based CSX is ahead more than 20 percent. They’re all still 25 percent or more below their highs set in late 2014 or early last year.
Read more: http://www.thegazette.com/subject/news/nation-and-world/railroad-investors-see-plunging-second-quarter-profit-at-bottom-20160713
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