Now that the third-quarter earnings are in for three of the largest listed railroads in America -- CSX (NASDAQ: CSX), Union Pacific (NYSE: UNP), and Kansas City Southern (NYSE: KSU) respectively -- it's time to check on what they mean for the economy and the railroad sector at large.
There are two overarching and intrinsically connected things to focus on with investing in the railroad sector right now. The first is the usual question of economic growth -- railroads' revenue will always be a function of freight conditions, and that depends on the economy. The second is the ability of the railroads to improve efficiency, usually judged in terms of their operating ratio, or OR, which measures expenses over revenue.
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