Canadian National Railway Hits New High on Strong Q2 Earnings - Analyst Blog


Shares of leading Canadian freight railroad company Canadian National Railway Company ( CNI ) touched a fresh 52-week high of $69.96 yesterday, before ending the session a trifle lower at $69.30.

The upswing in share price was primarily driven by robust second quarter results which, in turn, were supported by strong demand across most of the company's businesses, owing to improved consumer confidence in the U.S. and domestic retail markets.

Canadian National Railway, which has a market cap of more than $56 billion, has witnessed its shares shoot up nearly 45% over the past year, driven by better-than-expected performance in both the quarters of the first half.

Notably, the company has surpassed the Zacks Consensus Estimate in three of the last four quarters, with an average earnings surprise of 3.56%.

Strong Second Quarter Results

On Jul 21, 2014, Canadian National Railway reported second-quarter 2014 adjusted earnings per share of C$1.03 (approximately 96 cents), beating the Zacks Consensus Estimate of 92 cents by 4.3%. Earnings also increased 24.1% year over year on record volumes in several of its core markets coupled with solid execution.

Quarterly revenues increased 16.9% year over year to C$3,116 million (approximately $2,867 million) and surpassed the Zacks Consensus Estimate of $2,830 million. The year-over-year growth can be attributed to favorable currency fluctuations, higher freight pricing, record volumes, strong energy market and market share gains.

2014 Outlook

Bolstered by strong quarterly earnings, Canadian National revised its 2014 outlook in recognition of the strong growth opportunity within the Intermodal and bulk and merchandise markets.

The company is now confident of delivering solid double-digit earnings growth in 2014 over its 2013 diluted earnings of $3.06 per share. Previously, the company was only aiming for double-digit earnings growth in 2014.

For 2014, Canadian National projects a 3-4% year-over-year increase in industrial production in North America as compared to the previous guidance of 3% growth.

Other Stocks to Consider

Canadian National Railway holds a Zacks Rank #3 (Hold). Some better-ranked stocks within the sector are Canadian Pacific Railway Ltd ( CP ), GATX Corp. ( GMT ) and FreightCar America Inc. ( RAIL ). All these stocks carry a Zacks Rank #2 (Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: CNI , GMT , CP , RAIL

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