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

By
A A A

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).


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

CDN NATL RY CO (CNI): Free Stock Analysis Report

GATX CORP (GMT): Free Stock Analysis Report

CDN PAC RLWY (CP): Free Stock Analysis Report

FREIGHTCAR AMER (RAIL): Free Stock Analysis Report

To read this article on Zacks.com click here.



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

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

Stocks

Referenced

Most Active by Volume

88,615,972
  • $18.16 ▲ 1.57%
86,248,119
  • $31.24 ▼ 14.50%
51,068,934
  • $15.21 ▲ 3.61%
49,661,242
  • $26 ▼ 0.65%
45,376,064
  • $96.99 ▲ 1.78%
43,336,137
  • $35.76 ▲ 1.16%
40,128,160
  • $19.87 ▲ 0.61%
39,636,549
  • $46.29 ▲ 2.10%
As of 7/29/2015, 04:15 PM

Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com