NEW YORK - Earnings estimates for Berkshire Hathaway's Burlington Northern Santa Fe Corp railroad acquisition could signal weaker-than-anticipated U.S. industrial activity in 2010, according to a report in the December 28 issue of Barron's, Reuters reports.
Railroads, which transport more than 40 percent of U.S. freight, are often used as a gauge for the industrial sector, the report said.
Major indexes now match -- or are close to matching -- 2009 highs, and many industrial stock valuations suggest significant recovery, Barron's said.
By contrast, Burlington managements' most optimistic earnings forecast is short of Street estimates. Management forecasts best-case earnings of $5.06 in 2010, compared with Wall Street consensus estimates of $5.50 per share, according to the report.
Managers said it was more likely that the economy would not begin its recovery until 2011, causing the railroad shares to earn only $4.40 in 2010, Barron's said.
The weak forecasts suggest Berkshire may have overpaid for Burlington Northern, according to the report. Burlington Northern's shares are currently trading at about $98.40, below Buffett's $100 bid, the report said.
JPMorgan railroad analyst Thomas Wadewitz wrote recently that Burlington's management may be conservative and may not provide a good read of the other railroads. But Assistant Vice President of Policy Analysis with the Association of American Railroads Dan Keen said that there is no V-shaped recovery, and that the recovery is shallow.
(This item was distributed Dec. 28, 2009, by Reuters.)
"Weak"....duh. Where the fuck is "the business" going to be coming from? Half the nation is afraid to buy anything because they're unemployed. The building of new homes has come to a screeching halt as well as the timber industry. You can figure numerous coal fired plants aren't going to make the grade in the crackdown on emissions. What ever traffic levels are now is as high as it's going to get. The U.S. is being "torn down".
__________________
If you are in a horror movie, you make bad decisions, its what you do.
