On September 8, the troubled Texas-based dining chain Luby’s (LUB) announced its intention to liquidate after a strategic review process launched over the summer. At the time of writing, the shares, though volatile, trade below the lower end of the company’s estimate of $3-4/share upon liquidation (bolding below is mine):

While no assurances can be given, the Company currently estimates, assuming the sale of its assets pursuant to its monetization strategy, that it could make aggregate liquidating distributions to stockholders of between approximately $92 million and $123 million (approximately $3.00 and $4.00 per share of common stock, respectively, based on 30,752,470 shares of common stock outstanding as of September 2, 2020). Aggregate payments will likely be paid in one or more distributions. The Company cannot predict the timing or amount of any such distributions, as uncertainties exist as to the value it may receive upon the sale of assets pursuant to its monetization strategy, the net value of any remaining assets after such sales are completed, the ultimate amount of expenses associated with implementing its monetization strategy, liabilities, operating costs and amounts to be set aside for claims, obligations and provisions during the liquidation and winding-up process and the related timing to complete such transactions and overall process.

Source: Luby’s investor site

Insider Ownership

CEO Christopher Pappas owns over 23% of the shares, and his brother, Harris Pappas, has a similarly large holding. There has been no material insider selling since 2018. Hence, alignment with shareholders is relatively clear. The CEO will benefit far more from an effective, price-maximizing liquidation process than a drawn-out process with high fees.

Value Of Real Estate

That Luby’s has material real estate assets is not new news. There was a Seeking Alpha piece on it two years ago, some good valuation work here, and

Canadian Pacific Keith Creel. Source: Globe And MailCanadian Pacific Keith Creel. Source: Globe And Mail

Canadian Pacific (CP) reports earnings Oct. 28. Analysts expect revenue of $1.4 billion and EPS of $3.23. The revenue estimate implies a Y/Y revenue decline in the mid-single-digit percentage range. Investors should focus on the following key items.

Falling Rail Traffic

In 2019 railroads faced headwinds to their top lines. The pandemic has exacerbated the situation and business activity has free fallen. For the first 39 weeks of 2020, cumulative rail traffic for Canadian railroads was down 7.7%. Last quarter, Canadian Pacific’s rail traffic fell 14% Y/Y and its average selling price (“ASP”) rose over 5%. Over half of the company’s major product segments experienced revenue declines.

Canadian Pacific Q2 2020 revenue. Source: Shock ExchanangeOn a combined basis, Grain, Energy and Intermodal represented more than 65% of total revenue. Grain revenue was up 6% on a 5% rise in carloads and 1% rise in ASP. Lower Grain volumes in the U.S. partially offset record Grain volumes in Canada during the quarter. Revenue from the Energy, Chemicals, Plastics segment fell 1% on a 28% decline in carloads and 37% increase in ASP. COVID-19 triggered lower demand for crude and liquefied petroleum. Intermodal revenue was off 10% on a 5% decline in carloads and 5% decline in ASP. The segment should ebb and flow with the vagaries of the global economy.

Canadian Pacific’s carloads fell 14% Y/Y. Only three of its major product categories experienced increases in volume.

Canadian Pacific carloads. Source: Shock ExchangeCarloads for Grain rose in the low-single-digit percentage range on the strength of volume in Canada. Intermodal volume fell 5% Y/Y and I expect it to face long-term headwinds. Intermodal represented more than 40% of the company’s total carloads, so its performance will likely have an outsized impact on Canadian Pacific’s total volume.

The company hiked prices 5%, a sharp departure from competitors

Source: ForbesSource: Forbes

Union Pacific (UNP) reports earnings on October 22nd. Analysts expect revenue of $4.89 billion and EPS of $1.98. The revenue estimate implies a double-digit percentage decline in revenue. Investors should focus on the following key items.

Revenue Continues To Decline

The pandemic has practically shut down business activity. Falling business activity leads to falling revenue traffic and falling revenue for Union Pacific. For the first 38 weeks of 2020, combined U.S. rail traffic (carloads and intermodal units) fell 10.9% Y/Y. That portends a decline in revenue for Union Pacific.

Union Pacific Q2 revenue. Source: Shock Exchange

Last quarter, rail traffic and average selling price (“ASP”) fell 20% and 6%, respectively. Each of the company’s major product categories experienced revenue declines.

The Bulk segment included coal, grain, food, fertilizer, coal and renewables. Revenue from the segment declined 17% on a 15% decline in carloads and 2% decline in ASP. Coal was negatively impacted by lower natural gas prices and overall softness in the market. General Electric (GE) recently exited the coal power market due to unattractive economics, implying weakness in the market may not abate anytime soon. The pandemic negatively impacted shipments of food and refrigerated products.

The Industrial segment fell 23% on an 18% decline in volume and 6% decline in ASP. Low oil prices hurt energy revenue, while weak economic activity likely stymied industrial revenue. Meanwhile, the Premium segment fell as the pandemic hurt international intermodal revenue.

Total carloads fell 20% Y/Y, with each major product segment experiencing double-digit percentage declines.

Union Pacific Q2 2020 carloads. Source: Shock Exchange

The Premium segment, which included intermodal and automotive, experienced the largest decline in volume. Intermodal volume will likely track movements in global economic activity. Automotive could face more headwinds if consumers shun big ticket items amid the pandemic. Industrial could also face headwinds until the economy fully reopens.

The company’s blended ASP fell