Nice report from our BNI:
Burlington Northern 3Q earnings rise
October 23, 2007: 11:24 AM EST
Oct. 23, 2007 (Thomson Financial delivered by Newstex) --
DALLAS (AP) - Railroad operator Burlington Northern Santa Fe Corp. (NYSE:BNI) said Tuesday that its third-quarter profits rose 8 percent, beating Wall Street expectations, as price increases offset lighter freight shipments and higher fuel costs.
Chairman and Chief Executive Matthew K. Rose said the company was worried about the short-term prospect of a slowing economy, weak housing markets, sluggish consumer spending and high fuel prices.
But investors bid up shares of Burlington Northern, which rose $3, or 3.6 percent, to $86 in morning trading.
The company said it earned $530 million, or $1.48 per share, in the quarter ended Sept. 30, compared with $489 million, or $1.33 per share, a year earlier.
Analysts were expecting $1.37 per share, according to a survey by Thomson Financial.
Revenue rose 3 percent to $4.07 billion a year ago, and slightly topped the $4.04 billion forecast by analysts.
Fort Worth-based Burlington Northern said freight volumes fell by 4.7 percent due to weakness in the housing market, which dinged shipments of furniture, and in consumer goods.
But agricultural shipments rose 10 percent, to $682 million, behind strong demand for wheat and for corn used to produce ethanol. And revenue from coal shipments jumped 14 percent, or $101 million, to $849 million, even though volumes were virtually flat due to mine production problems, the railroad said.
Third-quarter expenses rose 1.7 percent, to $3.07 billion. Burlington reduced salary and benefit costs to offset a 7 percent hike in fuel prices.
Rose said the company was not buying out employees to remove them from the payroll, but was seeing attrition of about 2 percent per year and wouldn't increase the work force until shipping volumes resume.
'Although we have concerns near-term about the economy, housing markets, high fuel prices and general consumer softness, we continue to be optimistic about the long-term future of BNSF,' Rose said.
Morgan Keegan & Co. analyst Art W. Hatfield said Burlington Northern produced 'good results in a tough environment.'
For the fourth quarter, Burlington expects freight revenue to grow by a mid-single-digits percentage, with pricing remaining strong and volumes turning down slightly.
Over the next couple months, shipments of holiday goods could be hit by the trend of shoppers buying gift cards, which often aren't redeemed right away, delaying the need for retailers to ship goods by rail to stores before December, executives said.
Burlington Northern is the second-largest U.S. freight railroad operator after Union Pacific Corp. (NYSE:UNP)
Warren Buffett's Berkshire Hathaway Inc. (OOTC:HWYI) (NYSE:BRK A) controls 17.2 percent of the company's stock, up from an 11 percent stake in June. Buffett recently trimmed his investments in Union Pacific and Norfolk Southern Corp. (NYSE:NSC)
Company: BNI
Date: 10/23/2007
Next year's expected earnings: $5.90
EPS growth rate used for estimate: 11% (vs. average of 13.9%)
Multiple Graham used for estimate: 8.5
Graham Fair Value: $126.68
Current Price: $86.14
$ difference: $40.54
Percent Growth to Fair Value: 47.07%
Three year weekly chart with PE and EPS:
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