Pointing to “robust” traffic results so far this quarter, analysts at Cowen and Company have revised their earnings estimates for Class I carriers upward, as demand remains solid.
According to an investor note sent out by Jason Seidl, “solid growth should persist in the balance of the quarter.” He pointed to stable diesel prices and calm weather as variables that have remained non-factors during the quarter. Seidl added, however, that CSX and Norfolk Southern have seen decreases in train speed and increases in cars-on-line measurements, but that the majority of the other carriers have improved their service levels. Canadian National has shown the biggest improvement, Seidl wrote, with train speed increasing, and terminal dwell time and cars-on-line falling.
Overall, however, solid growth is happening in the rail industry.
“Total North American Class I traffic is up about 7.5 percent through May 31,” he wrote. “It is difficult to parse out the part of the growth that is attributable to pent-up demand, but our channel checks with industry contacts suggest that only 200-300 basis points of the growth is related to missed 1Q14 shipments. Comparisons on a year-over-year basis in the Week 23-Week 26 period that is left in 2Q14 should not be difficult, something that could help sustain the strong growth.”
Analyst: Railroads see ‘robust’ traffic
