I should know better than to tempt fate, but you can look at Genesee & Wyoming's
Consequently, this wasn't exactly a banner quarter. True, revenue was up 22%, but same-rail revenue growth (similar to same-store growth) was more on the order of 4.6%. Profitability was also mixed. Straight-up operating income was down 2%, but if you adjust for certain costs and impacts (including Mexico), the operating ratio still improved on a year-over-year basis.
At some level, then, this was a pretty good case of "good news/bad news." It was good to see revenue per carload up almost 6% and same-rail revenue per carload up almost 9% on nearly 7% higher pricing. By the same token, a 6% decline in same-rail traffic wasn't so good and does highlight the vulnerability of Genesee & Wyoming relative to Class 1 operators like Norfolk Southern
If you're willing to turn the page and look ahead, though, the picture seems brighter. The company is sitting on a big pot of capital and I can all but guarantee that some of that will go toward purchasing more rail operators. I think the odds are good that you won't know the company when they announce a deal (since they buy small operators) and/or they'll buy smaller pieces from bigger operators.
Additionally, there are some good old-fashioned organic growth opportunities. A new port in Virginia could mean more business from CSX
Since I've shied away from this stock for a while because of its valuation, the slide in the price (down 30% in less than a month) makes this very, very tempting. It's something of an odd duck in the railroad space, though, so make sure you do a little extra due diligence before buying your own ticket on this growing short-line operator.
All aboard for more Foolishness:
- Canadian Pacific Brings Up the Rear
- Norfolk Southern's Crazy Train
- Can Genesee & Wyoming Juice Its Caboose?
Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).
More from The Motley Fool
Here's Why Rail Road Stocks, Including Genesee & Wyoming, Rallied in November
The prospect of lower tax rates sent railroad stocks soaring at the end of the month.
The Weather Hit Genesee & Wyoming Inc's Volumes in the Third Quarter
The regional rail operator’s outlook remains positive.
Acquisitions Drive Genesee & Wyoming Inc's Revenue Higher
The regional rail operator remains on the lookout for its next deal.