Mr. Larry Shughart

GLG News^SM Analyses by Larry Shughart(?)

Do the railroads need to buy more locomotives?

July 28, 2008

Analysis of:Chugging Along | www.goerie.com

Will the railroad rennaisance result in a bright future for locomotive manufacturing companies? Does the recent upturn in railroad volumes mean more locomotives are required?

Can and will Railroads continue to raise prices in the future?

July 28, 2008

Analysis of:Norfolk Southern 2Q profit rises 15 percent | biz.yahoo.com

Railroads are producing record profits resulting from their raising average real prices nearly 25% over the last four years. Railroads are transitioning from a simplistic Pricing Strategy -- "raise them" -- to a sophisticated Yield Managemetn Strategy Railroads will maintain price discipline to AT LEAST offset inflation on all freight   Less desirable shipments will continue to see annual increases in the 7% to 9% range as railroads use price to rationalize capacity and balance flows.

Are railroads hiding behing the "Growth Capital" moniker?

May 12, 2008

Analysis of:New Era Dawns for Rail Building | online.wsj.com

“growth capital” may really be the result of a railroad’s failure to actively manage their physical plant in a way the ensures capital investment  and disinvestment closely maps to changes in traffic volumes from year to year and from corridor to corridor.

Why are Railroad Replacement Costs Higher than Book Value?

May 12, 2008

Analysis of:New costing approach key to railroad capital market access, expansion, growth | www.aar.org

One reason a railroad's replacement cost is higher than its book value is that the company has been harvesting the infrastructure by deferring normal replacement cycles such that the average quality and life remaining of the installed base is much less than what would be expected under a steady-state, nomalized maintenance program. The railroads generally say that they are properly maintaining their track and investing capital at a rate that ensures the plant is in a state-of-good repair; but, they also say that there are enormous "replacement cost" obligations that are not reflected in the book value of their assets.  Bridges are a clear example where many structures are over 100 years old.  But, the condition, quality and life of the track assests (rail, ties, and ballast) is a very complex issue and very difficult to assess.  In this article, I explain this complexity and show how we have developed methods for discerning this important aspect of railroad evaluation.

The Ethanol Boom: Good or Bad for the Railroads?

November 1, 2007

Analysis of:Etnamol, schmethanol | www.economist.com

How much of the current railroad renaissance is due to Ethanol? And how much more growth can we expect in the future? The impact of ethanol on grain markets and the demand for covered hopper cars is a matter of some debate. Our view is that while increased ethanol production will have a positive impact on tank car markets, the ethanol boom is having a negative impact on the rail grain markets.