Railroad Benchmarking: Canadian Rails Top Barclays' Quarterly Review

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  • Brandon Oglenski of Barclays began a new quarterly research report on the North America Airfreight & Ground Transportation sector.
  • Oglenski bencmarked the major North American railroads on revenue, cost, efficiency and financial measures.
  • Oglenski's first-ever carrier rankings place Canadian National Railway CNI and Canadian Pacific Railway Limited CP at the top.
Brandon Oglenski of Barclays released on Thursday a sector wide review of the North American railroad sector that encompasses a comparison of over 50 items to identify the best and worst performers in growth, cost efficiency, and financial returns. "Our rail carrier rankings take into account both absolute and relative performance as well as the rate of change (improving or worsening) on several important metrics," the analyst expanded. Topping the list is two Canadian-based railroads, Canadian National, and Canadian Pacific. Oglenski noted that it is "not surprising" that the two Canadian railroads are ranked number one and two, as the rail networks are "faring better" during the "deteriorating demand environment." The analyst also added that a favorable USD currency conversion rate is "definitely helping" the companies. In fact, excluding foreign exchange conversions, both companies are "driving relatively better growth" versus their US peers.
Union Pacific CorporationUNP
was ranked third, followed by
Kansas City SouthernKSU
, and
CSX CorporationCSX
.
Norfolk Southern Corp.NSC
was ranked last due to its poor cost efficiency metrics and continued pressure from its declining high margin coal traffic. The company also ranked last in financial returns while a worst in class operating ratio is driven by higher labor and "other" costs is "considerably higher" versus its peers.
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Posted In: Analyst ColorAnalyst RatingsBarclaysBrandon Oglenskicanadian nationalcanadian pacificCanadian RailroadsRailroads
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