Outperform - Price 33.23 on Oct. 7
by Morgan Keegan

The government renewed the short-line railroad tax-credit program as part of the Emergency Economic Stabilization Act of 2008, which provides tax credits for...[some] infrastructure investments. We expect GWR to benefit...going forward. Based on our current pretax revenue of E$120.1 million for 2009, reducing our tax-rate assumptions from 38% to 30% would yield about 26 cents a share in earnings. Market cap: $1.2 billion.

Genesee & Wyoming is the only public short-line railroad in the U.S. (based in CT), with a $1.6 million market cap. It derives 2/3 of revenue by transporting freight on 47 short-line railroads primarily in North America, as well as Australia, Bolivia and the Netherlands. Remaining revenues come from switching, loading, leasing, fuel sales and crewing operations. While very acquisitive, GWR has a disciplined strategy and an attractive, diversified asset base. Its exposure to coal shipping (at 17% of revenue) is less than half the industry average, so the company should weather a decrease in coal demand much better than other rails.

Genesee & Wyoming (GWR) was downgraded from Neutral to Sell, Merrill Lynch said. Valuation call, with the stock trading at a 70% premium to its historical average valuation. Estimates also cut, as the company is being hurt by fuel costs.

Shortline railroad operator

Outperform-- Price 27.12 on Feb. 19
by Morgan Keegan

[This leading international short-line railroad with 5,900+ track miles and another 3,700 via access arrangement] reported 4Q07 [earnings per share] of 37 cents -- beating our and management estimates... . Based on our increased fiscal-year "08 earnings estimate of $1.70 a share, GWR trades at 17.4 times... . GWR benefits from accretive acquisitions ... [plus] growth in nonfreight revenues and pricing power. Market-cap: $957 million.

Genesee & Wyoming (GWR) was upgraded from Peer Perform to Outperform, Bear Stearns said. $37 price target. Company is seeing high yields, and estimates were also raised to match management's new guidance.

GWR operates railroads in the U.S. and other countries around the world. GWR has debt but it also has something a lot of the other larger railroad operators would love and possiblly operate in a more efficient manor. GWR is also in the enviable position to acquire other railroads but their debt may hinder their aspirations. GWR has a PEG of 1.37 and the sector average is 1.04. Time will tell.

Buffet railroads, smaller cap

Let's see how wrong Buffet can be on this

good management
low debt