Bridge over ocean
1 May 1966 Financial Analysts Journal Volume 22, Issue 3

Railroad Review

  1. Karl Ziebarth

In 1965, investors enjoyed the first fruit of the great renaissance of rail earnings. Despite many problems, substantial progress was made in virtually every area of the industry’s endeavors. The statistical record alone gives some measure of the magnitude of the gains made; even more important are the qualitative changes which occurred.

* Rail stock prices, as measured by the Dow Averages rose some 20.5% compared with a 10.9% gain for industrial issues.

* Cash dividends paid to investors rose nearly 15% in 1965.

* Net income rose some 18 1/2% from an adjusted $678 million to about $8051 million, or possibly slightly more.

* Revenues rose to $10.1 billion, up 2.5% over 1964, the highest level since 1957.

* Ton-miles rose to about 695 billion, up 5.4% over the 1964 figure, and within striking distance of the 1944 peak of 737 billion.

* The operating ratio fell to 77.1%, the lowest ratio recorded since 1956’s 76.8%, and 2.4 points below the 79.5% ratio recorded in 1960.

* Capital expenditures rose to an all time record of $1.6 billion and would have been higher if delivery in 1965 could have been obtained for all material and equipment ordered.

* Serviceable cars increased for the first time in a decade, and overall tonnage capacity gained by some 5%, indicating that real progress has been made in meeting the shortage of freight cars.

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