Warren Buffett Comments Could Boost Rails Today (UNP) (CSX) (NSC) (CNI)
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Price: $282.59 +0.12%
Overall Analyst Rating:
SELL (= Flat)
Dividend Yield: 2.1%
Revenue Growth %: +6.3%
Overall Analyst Rating:
SELL (= Flat)
Dividend Yield: 2.1%
Revenue Growth %: +6.3%
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Shares of railroad stocks could see interest today after Warren Buffett's annual letter indicated that results at Burlington Northern Santa Fe are "working out even better than I expected."
Mr. Buffett said Burlington Northern is now expected to increase the company's "normal" earning power by nearly 40% pre-tax and by well over 30% after-tax.
Burlington Northern's revenue in 2010 was $16.85 billion, versus $14 billion in 2009. Net earnings were $2.46 billion in 2010, versus $1.72 billion in 2009.
Commenting on the BNSF and the sector in general, Buffett said:
Both of us are enthusiastic about BNSF's future because railroads have major cost and environmental advantages over trucking, their main competitor. Last year BNSF moved each ton of freight it carried a record 500 miles on a single gallon of diesel fuel. That’s three times more fuel-efficient than trucking is, which means our railroad owns an important advantage in operating costs. Concurrently, our country gains because of reduced greenhouse emissions and a much smaller need for imported oil. When traffic travels by rail, society benefits.
Over time, the movement of goods in the United States will increase, and BNSF should get its full share of the gain. The railroad will need to invest massively to bring about this growth, but no one is better situated than Berkshire to supply the funds required. However slow the economy, or chaotic the markets, our checks will clear.
Other railroad stocks to watch on the Buffett comments: Union Pacific Corporation (NYSE: UNP), CSX Corp. (NYSE: CSX), Norfolk Southern Corp. (NYSE: NSC), Canadian National Railway Company (NYSE: CNI).
Mr. Buffett said Burlington Northern is now expected to increase the company's "normal" earning power by nearly 40% pre-tax and by well over 30% after-tax.
Burlington Northern's revenue in 2010 was $16.85 billion, versus $14 billion in 2009. Net earnings were $2.46 billion in 2010, versus $1.72 billion in 2009.
Commenting on the BNSF and the sector in general, Buffett said:
Both of us are enthusiastic about BNSF's future because railroads have major cost and environmental advantages over trucking, their main competitor. Last year BNSF moved each ton of freight it carried a record 500 miles on a single gallon of diesel fuel. That’s three times more fuel-efficient than trucking is, which means our railroad owns an important advantage in operating costs. Concurrently, our country gains because of reduced greenhouse emissions and a much smaller need for imported oil. When traffic travels by rail, society benefits.
Over time, the movement of goods in the United States will increase, and BNSF should get its full share of the gain. The railroad will need to invest massively to bring about this growth, but no one is better situated than Berkshire to supply the funds required. However slow the economy, or chaotic the markets, our checks will clear.
Other railroad stocks to watch on the Buffett comments: Union Pacific Corporation (NYSE: UNP), CSX Corp. (NYSE: CSX), Norfolk Southern Corp. (NYSE: NSC), Canadian National Railway Company (NYSE: CNI).
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