(The Associated Press circulated the following article on October 25.)
NEW YORK — Shares of railroad operators gained more steam on Wednesday after Norfolk Southern Corp. closed the sector’s third quarter earnings season by posting a robust profit.
In afternoon trading, shares of Norfolk Southern led gainers, adding $4.16, or 8.6 percent, to $52.97. Shares of CSX Corp. chugged to a new 52-week high of $38.30 before settling back to $37.56, up $103 or 2.8 percent. Burlington Northern Santa Fe Corp. added 51 cents at $79.86. All trade on the New York Stock Exchange.
Norfolk Southern quarterly profit rose 38 percent to a record $416 million, or $1.02 per share, from $301 million, or 73 cents per share during the same period last year.
Analysts polled by Thomson Financial forecast profit of 81 cents per share.
The company reported revenue was boosted by fuel surcharges and strong increases from coal and general merchandise operations.
Rick Paterson, an analyst at UBS Investment Research, said he expected a surprise from Norfolk Southern, but the size of the gains were bigger than even his bullish estimates. Paterson ranks Norfolk Southern second behind Canadian National Railway Co. in terms of quality stock selections because unlike others in the sector they rely more on operational efficiency than commodity mix, which can be cyclical.
Nonetheless, five of the six major railroads operating in the U.S. and Canada exceeded Wall Street expectations in the quarter. The only loss was posted by Canadian Pacific Railway Ltd., which was weighed down by currency exchange rates and a special item.
Edward Wolfe, an analyst at Bear Stearns, tried to temper investor enthusiasm over all the positive news in recent days.
“Our sense is that the rail stocks are a little bit ahead of themselves in the near term,” he said in a research note.
Elsewhere in the sector on the NYSE, shares of Union Pacific Corp. gained 14 cents to $91.64, Canadian Pacific was unchanged at $55.76, and Canadian National lost 8 cents at $47.26.