Burlington Santa Fe Railroad Stock: An Investment with Potential

Burlington Northern Santa Fe (BNSF) is one of the largest railroads in North America, operating 32,500 miles of track in 28 states and two Canadian provinces.

The company's stock has been on a steady upward trend in recent years, and there are several reasons to believe that this trend will continue.

Factors Driving Growth

• Increased demand for rail transportation: The global economy is growing, and this is leading to increased demand for the transportation of goods. As a result, BNSF is seeing increased volumes of traffic on its lines.
• Rising coal production: Coal is a major commodity transported by BNSF, and the company is benefiting from the rising demand for coal in Asia. This increase in coal volumes on the company's lines, is resulting in increased revenue.
• Expansion of intermodal services: BNSF is moving more and more goods in intermodal containers, which can be transported by both rail and truck.

Earnings and Revenue

In 2019, BNSF reported revenue of $21.4 billion and net income of $5.5 billion. This represents an increase of 4% and 9%, respectively, over the previous year. The company's operating ratio, a measure of efficiency, improved to 64.4% in 2019, down from 65.2% the previous year. BNSF EPS was $ 2.69 on 2017, and $ 4.19 on 2021. It indicates a 55.76% growth.

Debt and Liquidity

BNSF has a strong financial position. As of 2018, the company had $11.7 billion in long-term debt and $2.2 billion in cash and cash equivalents. This gives the company a debt-to-equity ratio of 0.36, which is in line with other major railroads.

Valuation

BNSF stock is currently trading at around $195 per share. This represents a forward price-to-earnings ratio of 19x. This is in line with other major railroads, and it suggests that the company's stock is fairly valued.

Risks

There are some risks associated with investing in BNSF stock. These risks include:

• Economic recession: A recession would lead to a decrease in demand for rail transportation, which would hurt BNSF's revenue and profits.
• Competition from other railroads: BNSF faces competition from other railroads, such as Union Pacific and CSX. These railroads could take market share from BNSF, which would hurt its revenue and profits.
• Regulatory changes: The government could implement regulations that would hurt BNSF's business. For example, the government could impose new environmental regulations that would increase the cost of BNSF's operations.
• Extreme weather events: Extreme weather events, such as hurricanes and floods, can damage BNSF's tracks and equipment, which can lead to disruptions in service and lost revenue.

Conclusion

Burlington Northern Santa Fe (BNSF) is a well-run company with a strong financial position. The company is benefiting from several factors, including increased demand for rail transportation, rising coal production, and expansion of intermodal services. While there are some risks associated with investing in BNSF stock, the company's strong fundamentals suggest that it is a good investment for the long term.

Key Figures

• Revenue: $21.4 billion (2019)
• Net income: $5.5 billion (2019)
• Operating ratio: 64.4% (2019)
• Debt-to-equity ratio: 0.36 (2019)
• Forward price-to-earnings ratio: 19x
• 52-week high: $205.66
• 52-week low: $165.02

Useful Tables

• Table 1: BNSF Revenue and Net Income

• Table 2: BNSF Operating Ratio

• Table 3: BNSF Debt and Liquidity

• Table 4: BNSF Stock Price