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Weak Coal Demand Hurting Railroad Industry

Monday, 08 April 2013 02:20 AM

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The ShinesRooms.com Provides Stock Research onKansas City Southern and Canadian Pacific Railway Ltd

 

New York City, New York -- (April 08, 2013) 

2012 was a challenging year for the U.S. railroad industry as coal demand weakened on the back of unusually warm winter and record low natural gas prices. An uncertain economic environment also hurt the railroad industry. Despite the challenges, Kansas City Southern (NYSE: KSU), and Canadian Pacific Railway Limited (NYSE: CP) posted decent operating and financial results for 2012.

Access our free reports onKansas City Southern and Canadian Pacific Railway Ltd.Traders can also connect to our Wall Street Trading Floor where our research desk and market pros are standing between 8:50 am to 4:15 pm ET at

http://www.ShinesRooms.com/          

As natural gas prices fell sharply last year due to the shale boom in the U.S., several electric utilities began shifting from coal to natural gas to generate power. In fact, at one stage natural gas almost equaled coal in power generation last year. Nonetheless, natural gas prices have since risen from their record low levels. If prices continue to rise, utilities may be forced to switch to coal once again. This should boost demand and benefit the railroad industry.

The railroad industry is also expected to benefit from a pickup in economic activity. Notwithstanding some weak labor market data released last week, the U.S. economy has shown signs of recovery since the start of this year. The trend is expected to continue. In addition, the last minute fiscal cliff deal has also ended a great deal of economic uncertainty.

Despite facing significant challenges last year, Kansas City Southern, earlier in 2013, reported record fourth quarter and full-year 2012 results. For the fourth quarter, the company reported revenue of $568 million. The company’s carloads for the quarter were 532,000, which is another record. Operating income for the fourth quarter of 2012 stood at $174 million, compared to $150 million reported for the same period in the previous year. Net income for the quarter was $92 million, or $0.83 per share. Our free research report onKansas City Southerncan be downloaded upon registration at 

http://www.ShinesRooms.com/KSU040813.pdf  

For 2012, Kansas City Southern reported revenue of $2.2 billion, up 7% over 2011. Carloads for last year stood at 2.1 million, representing an increase of 5% over the same period in the previous year.

David L. Starling, President and CEO of Kansas City Southern, said that despite the impact on the company’s coal contract due to an unseasonably warm winter and low natural gas prices, the effect on grain carloadings of one of the most severe droughts in the U.S. history and the dampening effect on overall economic activity late in the year due to fiscal cliff concern, it achieved record carloadings and revenue in 2012.Canadian Pacific Railway Ltdfree research is available today at 

http://www.ShinesRooms.com/CP040813.pdf  

Back in January, Canadian Pacific Railway Limited also reported its fourth quarter financial results. The company’s diluted earnings per share for the quarter were $1.28, compared to $1.11 reported for the same period in the previous year.

E. Hunter Harrison, President and CEO of Canadian Pacific Railway Limited, said at the time of the release of quarterly results, that the company is moving forward on its transformational journey to become the most efficient railroad in North America.  

 

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