Railroad Companies – A Solid and Steady Investment
The railroad industry is divided into three distinct groups or ‘Classes’ in accordance with the Surface Transportation Board, an administrative affiliate of the Department of Transportation. They are as follows:
- Class I – Large North American railroads with revenues of more than $450 Million per year and generally have activities across US borders;
- Class II – Regional railroads with revenues between $36 Million and $450 Million per year and tracks of at least 350 miles;
- Class III – Local railroads including ‘Short Lines’, most Class III railroads are local government owned agencies providing rail service to their citizens.
In general, Class III railroads are not publicly traded investments, they are privately held operations. Class II railroads mostly exist as private investments for equity groups or are part of a holding company. One of the largest holding companies for railroads is Genesee & Wyoming Inc. which owns over 100 regional and local railroads. Genesee is currently transitioning from a public corporation to a privately held investment. There are currently about a dozen publicly traded Class II railroad companies. Most of them are targets by holding companies as good investments for long term cash flow.
Lastly, are the big operations. There are seven Class I railroads of which six
© 2019 – 2022, David J Hoare MSA. All rights reserved.