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Latest Headlines
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Jul 17, 2008 1:56:00 PM MST
Oil prices and economy expected to batter freight transportation stocks (Transportation-Result)
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MONTREAL _ Rapidly rising fuel prices and the sluggish North American economy are expected to hurt truck and train companies´ second-quarter results, says RBC Capital analyst Walter Spracklin.
Declining freight volumes, the impact of foreign exchange rates and significant flooding in parts of the U.S. Midwest have d a pessimistic sentiment ahead of the quarter´s financial reporting, which begins on Monday.
In a report to investors, Spracklin said he expects Canadian railway companies will underperform their U.S. peers.
He expects earnings per share for Montreal-based Canadian National Railway (TSX:CNR) will slip 10.5 per cent to 85 cents, while Calgary-based Canadian Pacific Railway (TSX:CP) should 6.5 per cent to $1.05 compared to a year ago.
Burlington North Santa Fe (NYSE:BNI) by contrast is expected to increase its EPS by eight per cent to US$1.30, from $1.20 last year.
The gloomy outlook should also hit trucking firms, which continue to be punished by an extremely difficult operating environment.
"Given the pronounced negative impact fuel costs have on the trucks´ bottom line and the impact of the strong Canadian dollar on cross-border shipments, we do not expect to see any positive catalyst that could spark any relief for the trucks," Spracklon wrote.
CNR continues to be a good rail buy for investors because of its relatively low share price.
Among the trucking firms, he favours TransForce Inc. (TSX:TFI) and ATS Andlauer Income Fund (TSX:ATS.UN).
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