(The Associated Press circulated the following on December 19.)
NEW YORK — Shares of some U.S. railroads traded lower Wednesday, after Union Pacific Corp. cut its outlook for the fourth quarter and full year, citing fuel costs and heavy winter storms.
Union Pacific, based in Omaha, Neb., is the nation’s largest railroad operator by revenue.
Morgan Keegan analyst Art Hatfield reduced his earnings forecast for the fourth quarter to $1.75 per share from $1.95 per share, and to $6.81 per share from $7.01 for the full year.
However, because the company’s lowered outlook was primarily related to fuel surcharge delays rather than weakening fundamentals, Hatfield maintained his “Outperform” rating on the stock.
A majority of the railroad’s contracts feature two-month delays between the rise in diesel prices and the time customer fees begin to reflect the increase. Most major U.S. and Canadian rails feature similar structures.
Hatfield said that considering the rising cost of diesel, it’s likely that other railroads will lower their guidance in the next several weeks. Union Pacific estimates diesel will average 34 percent higher in the fourth quarter than the same quarter last year.
Also Wednesday, CSX Corp. activist shareholders 3G Capital Partners Ltd. and The Children’s Investment Fund Management LLP took on a bigger role in the company by nominating a minority slate of five directors to the railroad’s board.
The groups have long-criticized the company’s management and operational performance.
In afternoon trading, Union Pacific Corp. slipped $6.43, or 5 percent, to $123, while CSX Corp. fell 33 cents to $43.28. Kansas City Southern lost 71 cents, or 2.1 percent, to $33.52, and Norfolk Southern Corp. fell $1.11, or 2.2 percent, to $48.93.
Burlington Northern Santa Fe Corp. retreated $2.18, or 2.6 percent, to $81.53.