(The Associated Press circulated the following on June 9, 2010.)
NEW YORK — A Barclays Capital analyst said Wednesday the nation’s railroads are likely to report strong earnings in the second quarter as the economy recovers and they keep costs under control.
Analyst Gary Chase said growing volumes, improving prices and strict cost controls should lead major railroads to report better-than-expected earnings for the April to June period.
U.S. railroads are a good investment, Chase said, as the economy continues to accelerate. They also aren’t exposed to troubles in Europe, leaving fewer risks.
Chase said his favorite rail investment is Eastern railroad Norfolk Southern Corp. So far this quarter, shipping volume is better than Chase had expected, especially in the Eastern U.S. as exports pick up.
He thinks prices will continue to rise this quarter and for the rest of the year as demand improves. And costs appear to be under control, Chase noted, as hiring in the sector remains slow.
Shares of Norfolk Southern rose 27 cents to $53.60 in afternoon trading, while Eastern rival CSX Corp. gained 15 cents to $49.40. Union Pacific Corp., the largest U.S. railroad, added 45 cents to hit $69.79.