PREVIEW-US transport Q1 earns watched for recovery signs

* Q1 results for transports will reflect poor volumes

* Analysts hoping for signs of "green shoots"

* But expectation is no recovery until 2010

By Nick Carey

CHICAGO, April 17 (Reuters) - After an awful first quarter
for the U.S. transport industry with precipitous drops in
freight volumes across the board, analysts will be watching a
slew of quarterly results in the coming week in hopes of seeing
some sign of a recovery on the horizon.

As well as kicking the tires to see how U.S. railroads and
trucking companies are weathering this recession, analysts will
be parsing executive comments for any indication that the worst
may be behind us.

"What we want to find out is if management teams are seeing
any green shoots out there," said Todd Fowler, an analyst at
KeyBanc Capital Markets. "Is there anything that might show we
have shoved off the bottom of this downturn?"

The short answer is apparently no. While Fowler and other
analysts say freight volumes appear to be stabilizing and that
they expect the pace of decline to slow as 2009 progresses, a
recovery this year is unlikely.

"Things are not getting better, but they're not really
getting that much worse right now," said Lee Klaskow, an
analyst at Longbow Research. "We don't think we'll see any
growth until 2010."

Among the worst-affected transport stocks are those of
trucking companies, which are now approaching the third
anniversary of their very own "freight recession."

While most big truckers are seen surviving the downturn due
to strong management and healthy balance sheets -- although No.
1 U.S. trucking company YRC Worldwide Inc (YRCW.O) is seen as
more troubled -- analysts say it is till too early to buy these
stocks.

HAMMER DOWN?

According to a monthly index produced by the American
Trucking Association's, truck tonnage fell 9.2 percent in
February. While bad, it was not as bad as January's 10.8 percent
decline or December's 12.5 percent drop.

Despite the tough quarter, some truckers have reported
upside results. Werner Enterprises Inc (WERN.O), for instance,
beat expectations in part due to fuel-saving measures.

But while analysts say operators like these are performing
well in the downturn -- the trucking downturn began back in the
third quarter of 2006 -- there are too many trucks chasing too
little business, which has pushed prices down. The expectation
for some time has been that falling volumes would bankrupt
enough small firms to lift the big operators.

However, falling fuel prices have served as a lifeline for
small "mom and pop" firms.

"We're not seeing capacity exiting the market as quickly or
as much as we had expected," KeyBanc's Fowler said. "This has
not resulted in an improvement in pricing that the industry has
been hoping for."

Truck stocks tend to do well on the leading edge of a
recovery because truckers are on the front line of the economy
-- the first to prosper in a boom and the first to bleed when
things go south -- usually starting about six to nine months
ahead of real economic growth. Analysts say that point appears
to be still some way off.

"We are not ready to jump in with both feet on a large
number of stocks yet," Stephens Inc analyst Thom Albrecht wrote
in a note for clients.

Analysts are cautious on YRC, which is still restructuring
its business and pre-reported first-quarter volume declines of
29 percent in its national network.

"We continue to recommend investors avoid the stock given
the lack of stability at YRCW and concerns surrounding future
financial flexibility," R.W. Baird & Co analyst Jon Langenfeld
wrote in a not for clients.

CHUGGING ALONG

More analysts are bullish on the U.S. railroads as there
are signs they have been able to hold the line on pricing and
have, according to Klaskow, "incredibly low valuations."

Freight volumes at U.S. railroads are also off dramatically.
For the first 14 weeks of 2009, volumes slid 17.2 percent,
according to the Association of American Railroads

Of the four major railroads, so far only CSX Corp (CSX.N)
has reported first-quarter results -- Union Pacific Corp
(UNP.N), Burlington Northern Santa Fe Corp (BNI.N) and Norfolk
Southern Corp (NSC.N) are yet to come -- beating analyst
expectations thanks to strong pricing and cost-cutting
measures, although its net income fell 23 percent.

"Is this as bad as it gets?" UBS analyst Rick Paterson
wrote in a note. "If so we'll happily take it."

Morgan Stanley analyst William Greene wrote in a client
note "we now expect most rails to outperform our first-quarter
estimates," thanks to strong pricing and cost reductions.

Longbow's Klaskow said the railroads' long-term potential
should have the stocks trading higher, but said concern over
the economy and attempts by rail customers to change the way
the rails are regulated have depressed their stock prices.

Burlington Northern has the highest valuation of the four
and is trading at a little over 12 times estimated earnings.

But Klaskow said investor fears the railroads could face a
regulatory overhaul that introduce similar conditions to those
preceding rail deregulation in 1980 were overblown.

"The railroads may see a change in regulatory environment,
but we're not going back to 1980," Klaskow said. "It's not
going to be the end of the world."
(Editing by Matthew Lewis)