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Domestic coal decline isn't hampering railroads' earnings, Paragon Report says


U.S. railroads have flourished of late despite a significant drop in domestic coal shipments, according to the Paragon Report, a market research firm that analyzes investing opportunities in the rail industry. Standard & Poor’s “Supercomposite Railroads Index” has climbed 29 percent since September 2011, outperforming the S&P 500 Index’s 21 percent gain, Paragon Report officials said in a prepared statement.

A recent resurgence in U.S. auto sales has provided a boost to rail traffic. Shipments of vehicles and auto parts recently reached the highest weekly total in nearly four years, Paragon Report officials said, citing Association of American Railroads data from March’s last week.

Combined, the North American Class Is reported a “healthy” 28.5 percent earnings gain in the first quarter compared with the same 2011 period, according to a BMO Capital Markets report, Paragon Report officials said.

“All the railroads exceeded consensus estimates by a healthy margin largely due to greater-than-expected productivity gains, robust pricing and a less-than-feared decline in coal revenues,” the cited BMO Capital Markets report states.

For more insight on railroads’ domestic and export coal business, follow this link to read an article (“A toll on coal”) published in Progressive Railroading’s May issue.

Contact Progressive Railroading editorial staff.

More News from 5/14/2012