U.S. railroad companies are in the spotlight after CSX Corp. (CSX-N
) reported better than expected second quarter earnings and revenue. Veteran transportation analyst Tony Hatch from ABH Consulting tells BNN CSX’s earnings highlight a greater trend: a railroad renaissance.
“CSX was a great lead-off story for the railroads,” he says. “[They’re earnings] reaffirmed a lot of what’s going on in this North American Rail renaissance—they have great secular growth story.”
Hatch says that while the railroad sector will face risks in the short term—mostly from rising costs—a strong long term outlook remains intact.
“If you take a step back over the intermediate term, all of the seven major railroads in North America will gain a major step forward, they will gain significant market share from the highway,” he says.
Union Pacific Corp. (UNP-N) and Kansas City Southern (KSU-N) report on Thursday. Norfolk Southern (NSC-N) reports on July 26.