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Why Did Genesee & Wyoming Fare So Poorly in Its Peer Group?

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Dec. 4 2020, Updated 10:52 a.m. ET

Genesee & Wyoming’s stock

On March 8, 2016, Genesee & Wyoming’s (GWR) market capitalization was ~$3.5 billion. The railroad industry had a bad 2015, and GWR was not immune. Although GWR’s stock has returned 9% year-to-date, its performance in the last 12 months was the worst in its peer group.

The above graph shows that during the last year, Genesee & Wyoming’s (GWR) has fallen by almost 42%. The peer group’s performance in the same timeframe follows:

  • Norfolk Southern (NSC) fell by 27.6%.
  • CSX Corporation (CSX) fell by 26.0%.
  • Union Pacific (UNP) fell by 31.0%.
  • Kansas City Southern (KSU) fell by 25.8%.
  • Canadian National Railway (CNI) fell by 12.8%.
  • Canadian Pacific Railway (CP) fell by 32.6%

Investors interested in rail stocks can opt for the First Trust Industrials/Producer Durables AlphaDEX ETF (FXR). Railroads make up about 5.2% of FXR’s portfolio.

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The early 2015 sentiments

Genesee & Wyoming has a rich history of acquisitions. It has substantially grown out of the numerous acquisitions in the last 30 years. The most notable was the 2012 acquisition of rival RailAmerica.

In early 2015, there was some buzz in the markets regarding another of Genesee & Wyoming’s prized possessions. Then came the news in February 2015 about GWR’s proposed acquisition of London-based Freightliner Group. On February 25, 2015, the market cheered and sent GWR’s stock up by ~7%. But, soon the cheers turned into tears.

In this series, we will focus on why GWR performed so badly in the markets. Was it the result of Freightliner acquisition or did the US’s biggest short-line operator get swept away in the floods of commodities’ downturn over the last year? Read on to find out more.

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