Railway earnings can't weather the storm
Published: March 20, 2008
Source: National Post
Printer friendly version
Canadian railways have had a rocky first quarter, with unusually extreme
cold weather and high winds in the West and high snow falls in the East
causing delays, derailments, and outright stoppages. The operational
issues has Walter Spracklin, RBC Capital Markets analyst, lowering his
earnings forecast for both Canadian National Railway Co. and Canadian
Pacific Railway Ltd.
“Fundamentally, we believe the issues impacting the Canadian railroads'
operating results are reflective of seasonal factors that are not
related to the overall demand for rail services,” he said in a note to
clients. “We continue to have a favorable outlook on the railroad
Mr. Spracklin said he was lowering his first quarter earnings forecast
for CNR to 61¢ a share, down from 70¢, which is also the Streets’
consensus. He also dropped his earnings forecast for the full year to
$3.63, from $3.71, but kept his price target of $61 a share and his
“outperform” rating on the stock.
For CP, he lowered his first quarter forecast to 73¢ a share, from 78¢,
and his full-year estimate to $4.79, from $4.85. He maintained his price
target of $78 and his “outperform” rating on the stock.