Yesterday, March 15, Union Pacific Corp. raised its first quarter earnings estimates by about 20%, citing better operating margins; unexpectedly strong revenue growth from the commodities markets it serves; and royalities from railroad modelers (just joking [:D]) . The stock rose $5.04 to $90.25. The Wall Street Journal writes, “strong demand for industrial and agricultural products fueled the growth in the railroad’s revenue even though coal volumes have been lower than expected. Railroad officials said mine production issues, especially in Colorado, are the main reason coal volume is down.” Concurrently, Merrill Lynch has raised its price targets for the railroad sector for the same reasons. Is UP out of the funk they were in?
All railroads are going to do much better because of highway congestion, other long-distance truck problems including shortage of drivers, and greater reliance on coal as a fuel.