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Railroad Stocks: Q1 Earnings Beat the Estimates


May. 21 2019, Published 11:57 a.m. ET

Railroads beat earnings estimates

The first-quarter reporting cycle is in the final stage. More than 90% of the S&P 500 members have already released their quarterly results. Among the several industries, the railroad industry had a decent quarter. Most of the stocks in the railroad industry reported better-than-expected first-quarter earnings results.

Most of the railroads reported their first-quarter results in April. Their upbeat bottom-line performance led to a 4.1% increase in the iShares Transportation Average ETF (IYT) in April. IYT tracks the stocks’ performance in the Dow Jones Transportation Average Index. IYT gained 18.2% from January to April. However, the recent trade war escalation between the US and China eroded IYT’s YTD (year-to-date) gain significantly. Currently, IYT’s YTD return is 14.6%.

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Major railroads’ first-quarter performance

Union Pacific’s (UNP) first-quarter EPS grew 15% YoY to $1.93 and beat analysts’ estimate of $1.89. The YoY growth was mainly driven by lower fuel costs, efficient cost management, and reduced outstanding shares.

Higher pricing and lower costs led to a 31% YoY increase in CSX’s (CSX) first-quarter EPS. The company’s quarterly EPS of $1.02 beat analysts’ forecast of $0.91.

Norfolk Southern’s (NSC) first-quarter EPS of $2.51 beat analysts’ estimate of $2.18 and marked a YoY improvement of 30%. Increased revenues and lower costs mainly drove the YoY growth in the bottom-line results.

Higher revenues and improved operating efficiency led to a 18% YoY increase in Kansas City Southern’s (KSU) first-quarter bottom-line results. The company’s quarterly EPS of $1.54 also beat analysts’ estimate of $1.44.


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