Performance Analysis: North American Railroad Stocks !!

In this post lets review the 5 year performance of the top railroad stocks of Canada and the US.Our primary goal here is to analyze which company did the best in terms of stock returns. We will also see if the two Canadian railroads offered higher returns than their US peers or vice versa.

There are 7 US and 2 Canadian railroad stocks listed in the US markets. They are:

a) Canada
1. Canadian National Railway Company – CNI
2. Canadian Pacific Railway Limited – CP

b) US
1.Burlington Northern Santa Fe Corp. – BNI
2.Norfolk Southern Corp – NSC
3.CSX Corp. – CSX
4.Union Pacific Corp. – UNP
5.Kansas City Southern – KSU
6.Genesee & Wyoming Inc. – GWR
7.Providence & Worcester Railroad Co. – PWX

Out of the 7 US railroads, KSU,GWR and PWX are Class II Regional Railroads. So we will ignore them when comparing the US railroads with the Canadian ones.

Ticker/Yearly TR 2003 2004 2005 2006 2007 Yearly Avg.
CP 45.2% 24.1% 23.5% 27.4% 24.1% 28.9%
CNI 54.4% 47.1% 32.3% 9.0% 10.8% 30.7%
NSC 20.1% 55.1% 25.5% 13.7% 2.2% 23.3%
UNP 18.0% -1.3% 21.8% 15.9% 38.3% 18.5%
BNI 26.8% 48.8% 51.7% 5.5% 14.3% 29.4%
CSX 28.6% 12.9% 27.9% 37.0% 29.4% 27.2%
S&P 500 Index 2.7% -17.1% 0.2% 22.5% 10.1% 3.7%
DJ Transportation Index 32.0% 27.9% 10.9% 9.0% 0.4% 16.0%

Canadian National and Canadian Pacific have returns that track each other closely.This is not surprising since CNI concentrates in the East coast while CP is the main railroad for the great Canadian western provinces. In year 2006 and 2007 CNI’s performance has becomes average when compared with CP.CNI beat the DJ Transportation Index in each of the years.

On the US side, UNP and CSX are consistent performers.Norfolk Southern barely stayed in the positive territory in 2007.

Overall all the railroads delivered higher returns than the S&P 500 Index in all 5 years.

When we look at the average yearly return(last column), the best performer is the Canadian railroad CNI with an average annual return of 30.7% for the past 5 years.CP is close behind with 28.9%.

CNI beat all the US railroads but BNI was very close with 29.4%.CNI is much bigger than CP in Canada.With the Prince Rupert terminal open for business in the last quarter of 2007 to handle Asian shipments to North America, it is possible that CNI will do a lot better than other railroads in the coming years.
[tags]adrs,railroad stocks,railroads[/tags]

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Canadian National: The Best Railroad for This Recession

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