Railroad stocks took a hit on Wednesday after Norfolk Southern's CEO dimmed hopes for imminent M&A deals. Charles "Wick" Moorman said on an earnings call that railroad mergers would be highly problematic.
On CNBC's "Closing Bell" Moorman explained that his commentary reflected something the industry has believed for quite some time. "Given the regulatory environment, any kind of M&A would likely be met with tremendous scrutiny.
"And even if we could gain regulatory approval, we would have to give up, we believe, most if not all of the potential benefits," he said.
However, his commentary does not reflect any kind of negative outlook on the industry or the broad economy. In fact, he's quite positive.
"I don't think the industry needs more mergers to have a bright and compelling future. If you look at all of the other trends, we have a lot of growth potential and a lot of exciting opportunities without thinking about mergers," he said.