Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
It is always interesting to view the domestic economy through the eyes of companies rather than government data, and while it receives little hype on the financial infotainment media, one of the more interesting data points is mega railroad CSX. While many of these railroads operate as virtual monopolies… or at best oligopolies, which sure helps with pricing power – the underlying data they churn out is what is interesting. What CSX said yesterday confirms the multi year “meh” economy continues. Some strength in interest rate sensitive parts of the economy such as housing and autos, continued weakness in coal and ag, a nice pickup in the chemicals area but overall “meh”.
- Revenue ticked up 1.9% to $3.07 billion, narrowly beating the $3.02 billion estimate.
- The strongest business unit in terms of volumes was industrial, where the chemicals division saw an 11% gain to 133,000 units. The company highlighted increased shipments in energy-related materials including crude-oil, liquid petroleum gas, and frac sand.
- Automotive shipments grew 2% to 113,000 units on the back of increased vehicle production of light vehicles across North America.
- Another unit that did well was housing and construction. Forest product shipments were up 3% to 74,000 units. “Volume growth was led by an increase in building product shipments due to the continued recovery of the residential housing market,” the company said. Minerals also benefited from the housing recovery, as shipments of crushed stone, sand, gravel, and other materials pushed volume up 7% to 75,000 units.
- The agricultural unit was the worst performer in the quarter, with agricultural product volume down 7% to 95,000. “Volume decreased due to lower shipments of feed grain, soybeans and ethanol. Feed grain and soybean shipments were impacted by low supplier inventories caused by last year’s drought and increased competition from imports,” the company explained. Volume also gained at the phosphate and fertilizer unit, while food and consumer shipments declined.
- Coal volume slid 6% to 310,000 units while intermodal ticked up 2% to 644,000 units.
Disclosure Notice
Any securities mentioned on this page are not held by the author in his personal portfolio. Securities mentioned may or may not be held by the author in the mutual fund he manages, the Paladin Long Short Fund (PALFX). For a list of the aforementioned fund’s holdings at the end of the prior quarter, visit the Paladin Funds website at http://www.paladinfunds.com/index.php/the-fund/holdings
