We believe valuation should be based on a combination of an underlying company’s risk, reward and returns. Our note today compares each of our transport companies relative to each other and the S&P 500 based on 6 historical and projected metrics including: Rev. and EPS growth (i.e. reward), free cash flow and return on capital (i.e. returns), and balance sheet leverage and earnings cyclicality (i.e. risk).
Total Week 18 Rail vols increased 3.1% y/y, up from +1.6% and +1.2% the prior 2 weeks when the rails faced difficult comps around the timing of Easter. However, the rails still face tougher comps generally in 2Q vs. 1Q and vols are now tracking up 3.1% QTD in 2Q vs. +5.2% growth in 1Q.
Total Week 33 Rail vols increased 14.6% y/y, similar with +14.9% and +14.1% the prior 2 weeks. Overall vols are now tracking up 13.3% QTD more than halfway through 3Q, above our expectations of about 10%-11% growth, although y/y comps get increasingly tough going forward. On a 2-year stacked basis, vols remain down 7% vs. C08 levels.
Total Week 7 Rail vols increased +7.3% y/y vs. -2.2% and +5.6% the prior 2 weeks. Total vols were up 4% sequentially, as the network began to operate a bit smoother following severe winter storms. We suspect today’s storms could cause further shutdowns and delays so vols are likely to remain choppy week to week within an upward trend into easing comps and gradually improving demand. Through the first 6 weeks of the year, vols are tracking up 3.3% QTD vs. our expectations of +4.2% in 1Q.
This weekly report summarizes the most recent views and research of Wolfe Research. Included are (1) three to five snippets or key takeaways from our team’s recent channel checks with traffic managers about their experiences with purchasing, competition, and service from Airfreight and Logistics, Rail, and Truck capacity providers; (2) notices of upcoming industry events; (3) key takeaways from some of our notes from the past week; (4) recent stock performance for our transport universe; (5) updated comparison tables for the airfreight and logistics group, railroads, and trucking; and (6) fuel trends for West Texas Crude Oil, On-highway diesel, Rail diesel, and Jet fuel.
Total Week 6 Rail vols decreased 2.2% y/y vs. +5.6% and +7.1% the prior 2 weeks. Total vols were down 4% sequentially, due largely to inclement weather, particularly in the U.S. East coast. KSU’s Mexican vols. remained very strong. Through the first 6 weeks of the year, vols are tracking up 2.7% QTD vs. our expectations of +4.2% in 1Q.
We are withdrawing coverage of Burlington Northern Santa Fe (BNI) following the company’s acquisition by Berkshire Hathaway and subsequent delisting on Feb. 12th. The merger was announced on Nov. 3, 2009and received shareholder approval on Feb. 11th. The merger closed on Friday and the stock was subsequently delisted.
Total Week 5 Rail vols increased 5.6% y/y vs. +7.1% and +5.4% the prior 2 weeks. However, total vols were down slightly sequentially, likely due to inclement weather throughout the U.S. Through the first 5 weeks of the year, vols are tracking up 3.7% QTD vs. our vol. expectations of +4.2% in 1Q and +10.2% in 2Q into easy comps. Next week’s vols should be more impacted by weather.
This weekly report summarizes the most recent views and research of Wolfe Research. Included are (1) three to five snippets or key takeaways from our team's recent channel checks with traffic managers about their experiences with purchasing, competition, and service from Airfreight and Logistics, Rail, and Truck capacity providers; (2) notices of upcoming industry events; (3) key takeaways from some of our notes from the past week; (4) recent stock performance for our transport universe; (5) updated comparison tables for the airfreight and logistics group, railroads, and trucking; and (6) fuel trends for West Texas Crude Oil, On-highway diesel, Rail diesel, and Jet fuel.
Total Week 4 Rail vols increased 7.1% y/y, up from +5.4% and +4.5% the prior 2 weeks. However, total vols were down slightly sequentially, driven by w/w declines for the Canadian rails. Through the first 4 weeks of the year, vols are tracking up 3.2% QTD and rising vs. our vol. expectations of +4.2% in 1Q and +10.2% in 2Q into easy comps.