The first quarter is in the books, and North America's largest railroads, including Union Pacific (NYSE:UNP) have issued their financial results. In general, investors should be modestly pleased and cautiously optimistic about how the rest of 2014 will unfold.

Before we look to the future, though, now is the time to examine the recent past and draw some conclusions that may make us better investors. Here are three important conclusions drawn from first quarter results of the five largest publicly traded railroads.

Be careful of expectations
Due to challenging winter conditions and the willingness of railway executives to blame weather for operational issues experienced during the fourth quarter of 2013, analysts were quick to lower earnings expectations as the extreme weather persisted well into 2014.

Consensus estimates for earnings per share were reduced, in some cases by as much as 17%, during the weeks prior to first-quarter results being announced. As a result, four of the top five publicly traded railroads either met or exceeded lowered expectations. The lone exception was Norfolk Southern (NYSE:NSC), which missed analysts' expectations for EPS by 3%.

As investors, we can become preoccupied with whether companies miss, meet, or exceed expectations. Thought it's important to understand how those expectations were established and evolve over time, it's critical to maintain a long-term mind-set. The first quarter wasn't necessarily bad, but would have looked a lot worse if it were not for analysts' lowered expectations. 

Winter weather tends to be seasonal
Winter weather, and its effect on operational performance, took center stage during first-quarter earnings conference calls with analysts and investors. When it's extremely cold for extended periods of time, railways aren't terribly efficient. They need to run shorter trains, utilize more locomotives, and spend more money on fuel and labor.

Canadian National (NYSE:CNI) beat EPS consensus estimate by 5%, the best performance among Tier 1 railroads. A heavily congested Chicago, which slowed traffic to a crawl during January and February, affected Canadian National the least.

Source: Canadian National

With the 2008 purchase of Elgin, Joliet, & Eastern Railway Company (EJ&E), Canadian National established a bypass around the western side of the heavily congested Chicago-area rail hub. this alleviated substantial bottlenecks for both regional and intercontinental rail traffic that would have been subject to lengthy delays entering and exiting Chicago freight yards. This acquisition will likely benefit Canadian National, and its investors, for the long-term, through good weather and bad. 

Recovering rail freight volumes 
For the first quarter, combined U.S. and Canadian railroads reported volume of 4,539,997 carloads, a decline of just under 1% from the same period last year. Intermodal units increased to 3,902,929, an increase of 3.4% over last year.

Combined, total traffic increased by just 1.1%. This is not a great sign for the nascent economic recovery, but it's not necessarily bad news either given the very difficult month of January. 

Based upon improving traffic volumes reported to the American Association of Railroads, it appears that momentum is returning to the movement of freights throughout North America. Through the first four months of 2014, total traffic is 2.5% greater than the same period a year earlier, powered by a nearly 5% increase in intermodal traffic.

Foolish bottom line
After a severe winter that posed significant operational challenges, momentum is quickly returning to the movement of freight across the nation's railroads. A record North American grain crop, intermodal strength, and diminished coal stockpiles at utilities due to the cold weather all suggest stronger second quarter results, and increased expectations for Canadian and American railways. 

Justin Lacey has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.