2008-07-21 12:19:11 -

- Zacks.com releases the latest Analyst Interview. Today's interview is with senior analyst Ann Heffron, who discusses CSX Corporation (NYSE: CSX), Werner Enterprises, Inc. (Nasdaq: WERN) and United Parcel Service, Inc. (NYSE: UPS).

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Have any companies under

your coverage reported yet?

There have been two companies in my industries that have reported earnings to date--CSX Corporation (NYSE: CSX) in the rail industry and Werner Enterprises, Inc. (Nasdaq: WERN) in the trucking industry.

CSX reported strong earnings growth that was up 26% year over year, which matched the consensus. While revenues came in much higher than expected due to strong pricing trends that offset weak volume, this was offset by soaring fuel costs. CSX management affirmed previously released earnings guidance. Going forward, improved efficiency, strong yields, and share buybacks should offset weakening volumes from a slowing economy and higher fuel costs. CSX shares increased 6% following release of its earnings.

As to WERN, the company posted second quarter EPS that was down 17% year over year, but still managed to beat consensus by a significant amount. Revenues were higher than we had estimated, reflecting fuel surcharge revenues and a stabilizing rate market. Moreover, Werner experienced improving freight demand over the last five weeks of second quarter 2008 due to tightening capacity, reflecting trucking company failures that have reduced supply. In addition, WERN implemented numerous initiatives to improve fuel efficiency, which reduced fuel consumption by nearly two million gallons compared to the second quarter of 2007. Since release of its second quarter report, WERN shares have jumped 13%.

Which are your top Buy recommended stocks in this space?

We have a buy on United Parcel Service, Inc. (NYSE: UPS). Based in Atlanta and incorporated in 1907, United Parcel Service is the world's largest express carrier and package delivery company. The company also provides specialized transportation and logistics services. Superior operating efficiency, balance sheet strength, and ROE justify a premium valuation to the peer group. Moreover, the board of directors increased the company's share repurchase authority to $10 billion in January 2008 from $2 billion in October 2007, of which the company estimates that it will repurchase roughly $5 billion in 2008 and the remaining $5 billion in 2009. UPS just increased its quarterly dividend in January 2008 to $0.45 per share from $0.42 per share Therefore, we expect valuation to expand from currents levels.

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