If Warren Buffett has it right, then analysts have it all wrong when it comes to future earnings for the North American railways, says a new report from Scotia Capital Markets.
Based on a new SEC filing associated with Berkshire Hathaway's US$100 bid to acquire Burlington Northern Santa Fe Corp., analyst Cherilyn Radbourne said consensus profit estimates for the Big Six Class I railroads look inflated and may need to be adjusted downward.
Ms. Radbourne said that according to the filing, financial advisors to Berkshire's board responsible for determining the fairness of the deal relied on financial forecasts prepared by Burlington Northern management based on four economic scenarios: Recovery in 2010; recovery in 2011; no recovery; and lastly a deeper recession case that assumed a general worsening of economic conditions over the next five years....MORE
Monday, November 30, 2009
Buffett's rail earnings estimates lower than consensus (BRK.A; BNI)
From the Financial Post's Trading Desk blog: