Analyzing the Solid Rise in GWR’s Volumes in August

GWR’s Australia rail traffic

In August, Genesee & Wyoming’s (GWR) Australia region witnessed robust 37.1% YoY (year-over-year) growth in rail traffic. The company hauled ~54,500 railcars in that month—compared to ~39,800 in the corresponding period of 2017.

GWR’s traffic of commodity groups other than coal and coke totaled 27.3% of total railcars in August, down from 30.9% in the comparable period of 2017. These carloads witnessed a 21.3% YoY rise in the last month, touching ~14,900 units from ~12,300 units in August 2017. Coal and coke carloads jumped 44.2% to ~39,600 units in August compared to ~27,500 in August 2017.

Analyzing the Solid Rise in GWR’s Volumes in August

Change in commodity groups and reasons

Genesee & Wyoming (GWR) furnishes carload data for its 51.1%-owned Australian operations. For reporting purposes, the data pertaining to its Australian operations are presented on a 100.0% basis. The rise in coal and coke carloads was mainly due to the negative impact of coal traffic from August 2017 through December 2017. The negative impact was due to an industrial action at the Hunter Valley coal mines.

Minerals and stone carloads in August were higher YoY, as an outage at a customer port facility unfavorably impacted gypsum traffic in August and September 2017. Agricultural product volumes declined 40.8% YoY, due to a poor 2017–2018 harvest in South Australia. Metallic ore shipments fell 30.4% YoY in August due to a temporary shutdown of an iron ore mine in October 2017.

ETF discussion

The iShares Transportation Average ETF (IYT) invests 28.7% of its portfolio in GWR stock. Major transportation companies included in IYT’s holdings are Norfolk Southern (NSC) with a weight of 9.73%, Union Pacific (UNP) with a weight of 8.6%, and J.B. Hunt Transport Services (JBHT) with a weight of 6.44%.

In the final part of this series, we’ll look at analysts’ recommendations for GWR and its peers.