Market Overview

Railroad Benchmarking: Canadian Rails Top Barclays' Quarterly Review

Railroad Benchmarking: Canadian Rails Top Barclays' Quarterly Review
  • Brandon Oglenski of Barclays began a new quarterly research report on the North America Airfreight & Ground Transportation sector.
  • Oglenski benchmarked the major North American railroads on revenue, cost, efficiency and financial measures.
  • Oglenski's first-ever carrier rankings place Canadian National Railway (NYSE: CNI) and Canadian Pacific Railway Limited (NYSE: 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 No. 1 and  2, as the rail networks are "faring better" during the "deteriorating demand environment." The analyst 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 U.S. peers.

Union Pacific Corporation (NYSE: UNP) was ranked third, followed by Kansas City Southern (NYSE: KSU), and CSX Corporation (NYSE: CSX).

Norfolk Southern Corp. (NYSE: 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.

Latest Ratings for CNI

Apr 2019DesjardinsDowngradesBuyHold
Apr 2019CitigroupMaintainsBuyBuy
Jan 2019Credit SuisseUpgradesNeutralOutperform

View More Analyst Ratings for CNI
View the Latest Analyst Ratings

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