Today's Charting on CSX and Norfolk Southern: Coal Volumes Challenge Industry

LONDON, January 23, 2013 /PRNewswire/ --

Declining coal shipments were a major concern for the railroad industry last year. StockCall has assessed the following railway majors, Norfolk Southern Corp. (NYSE: NSC) and CSX Corp. (NYSE: CSX), and free reports on these companies are available at http://www.stockcall.com/registration    

Despite last year's depressed coal shipments, utility coal consumption did improve for the last two months of the year though. But this did not help companies like Norfolk Southern and CSX Corp. to bring in better result for their recently posted quarters. Both companies released their fourth quarter earnings with feeble coal demand weighing on their profitability. A wide-ranging technical and charting analysis on Norfolk Southern is available for free at http://www.StockCall.com/NSC012313.pdf

Norfolk Southern reported a 14% drop in profit for its fourth quarter to $1.30 per share from $1.42 per share reported a year ago. According the company's CEO, Wick Moorman, the Norfolk headquartered railroad managed to absorb to some extent a 23% decrease in coal revenue on the back of a surge in intermodal shipments and shipments of auto, chemicals and materials linked to housing. Norfolk Southern is planning to cut expenses by $100 million this year, and it also decided to take cost reduction steps by cutting 300 maintenance jobs.

Conversely, CSX corp. [Free Report on CSX] ^[1] also reported a decline in its fourth quarter earnings of 3%, and weakness in coal demand was again to blame. The railroad operator stated that its coal revenue fell 18% and even a better performance in its automotive, intermodal and crude oil shipments did not offer a good counterbalance to the negative impact of the decrease in coal.

Despite a positive finish to 2012, a shifting rail freight landscape will make significant gains challenging for industry players to come by. The natural gas supply glut continues to cause coal's popularity to wane. Subsequently, freight companies with strong exposure to coal demand may struggle to grow revenues. Barring a major change to natural gas supplies, prices or energy consumption preferences, coal shipments may likely remain flat or continue to decline.

Profitability is becoming a challenge to come by but favorable fuel prices and increased merchandise volumes are encouraging. Investors will want to track which major rail companies can most effectively reduce exposure to coal shipments.  

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1. CSX Corp. Technical Analysis [ http://www.StockCall.com/NorfolkSouthernCorp012313.pdf ]

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