(The Associated Press circulated the following story on March 27.)
NEW YORK — Shares of railroads traded lower on Monday as analysts drew back their earnings expectations to reflect softer freight volumes in the first quarter.
Shares of eastern railroad CSX Corp. fell $1.49, or 3.6 percent, to $40.16 in midday trading. Shares of Union Pacific Corp. the nation’s largest railroad, lost $1.51 to $102.69. Shares of its western rival, Burlington Northern Santa Fe Corp., gave up $1.36 to $81.28, while shares of Canadian Pacific Railway Ltd. surrendered 28 cents to $55.84. All four stocks trade on the New York Stock Exchange.
Thomas Wadewitz, an analyst at JPMorgan, lowered his first quarter estimates on CSX to 49 cents per share from 53 cents per share, and trimmed expectations on Canadian Pacific, to 67 cents per share from 69 cents per share. Analysts on average expect 55 cents per share from CSX and 71 cents per share from Canadian Pacific, according to a poll by Thomson Financial.
Wadewitz cited softer freight demand across the sector, but also noted that CSX faces some costs pressures and financial headwinds from a derailment in Kentucky, while Canadian Pacific met with weather-related service disruptions. Western and Canadian railroads fared better than eastern rails amid the weaker demand, he said in a note to client on Monday before the markets opened.
Scott Flower, an analyst at Banc of America Securities, cut full-year estimates on railroads under his coverage by an average of 2 percent, with most of the reductions reflected in the first half of 2007.
“Overall, we expect 1Q results to be rather soft,” Flower said in a research note to clients on Friday after the markets closed. Flower thinks railroads will report particularly slower volume growth in intermodal freight, which draws most of its support from consumer spending.
Elsewhere in the sector, shares of railroad Norfolk Southern Corp. fell $1.10, or 2.1 percent, to $50.87. Shares of Canadian National Railway Ltd. lost 21 cents to $45.90. Both stocks trade on the NYSE.