In light of train operator Amtrak bolstering its fleet modernization project, five railroad companies with high business profitability as of Wednesday are Union Pacific Corp. (UNP, Financial), CSX Corp. (CSX, Financial), Norfolk Southern Corp. (NSC, Financial), Canadian Pacific Railway Ltd. (CP, Financial) and Kansas City Southern (KSU, Financial) according to the All-in-One Screener, a Premium feature of GuruFocus.
Amtrak modernizes fleet as train ridership rebounds
The Washington, D.C.-based train operator said that it plans to invest $7.3 billion in a fleet of new trains, including the first hybrid-electric powered trains. Amtrak CEO Bill Flynn said in a statement the new trains will “reshape the future of rail travel” and expand the company’s Northeast Regional operations. The company added that demand for rail travel surged to 80% of levels from 2019 on the back of loosened Covid-19 pandemic restrictions.
As such, investors may find opportunities in railroad companies that have high business profitability. GuruFocus’ profitability rank considers several key factors, including operating margin growth and consistency of revenue and earnings growth.
Union Pacific
Union Pacific (UNP, Financial) operates railroad services on over 30,000 miles of track in the western two-thirds of the U.S. GuruFocus ranks the Omaha, Nebraska-based company’s profitability 8 out of 10 on several positive investing signs, which include a 3.5-star business predictability rank and an operating margin that has increased approximately 1.8% per year on average over the past five years and is outperforming more than 95% of global competitors.
Gurus with holdings in Union Pacific include Ken Fisher (Trades, Portfolio) and PRIMECAP Management (Trades, Portfolio).
CSX
CSX (CSX, Financial) hauls shipments of coal and chemical products on more than 21,000 miles of track in the Eastern U.S. GuruFocus ranks the Jacksonville, Florida-based company’s profitability 8 out of 10 on several positive investing signs, which include a four-star business predictability rank and an operating margin that has increased approximately 8.1% per year on average over the past five years and outperforms more than 96% of global competitors.
Norfolk Southern
Norfolk Southern (NSC, Financial) operates more than 21,000 miles of track in the Eastern U.S. GuruFocus ranks the Norfolk, Virginia-based company’s profitability 8 out of 10 on several positive investing signs, which include a four-star business predictability rank and an operating margin that has increased approximately 5% per year on average over the past five years and is outperforming approximately 95% of global competitors.
Canadian Pacific
Canadian Pacific (CP, Financial) operates over 12,500 miles of track across Canada and the Midwestern and Northeastern parts of the U.S. GuruFocus ranks the company’s profitability 9 out of 10 on several positive investing signs, which include a five-star business predictability rank and an operating margin that has increased approximately 2.6% per year on average over the past five years and is outperforming more than 97% of global competitors.
Kansas City Southern
Kansas City Southern (KSU, Financial) operates over 3,400 miles of track in the central and southern regions of the U.S. GuruFocus ranks the Kansas City-based company’s profitability 9 out of 10 on several positive investing signs, which include a high Piotroski F-score of 7, a five-star business predictability rank and an operating margin that has increased approximately 2.90% per year on average over the past five years and is outperforming more than 96% of global competitors.
