Shares of leading Canadian freight railroad company,
Canadian National Railway Company
), touched a new 52-week high of $61.06 yesterday, before ending
the trading session a trifle lower at $60.82.
Canadian National Railway, which has a market cap of more than
$50 billion, has witnessed its shares shoot up nearly 19% in the
past one year.
The increase in share price was primarily driven by robust
quarterly numbers which in turn, are supported by strong demand
across most of its businesses on the back of improved consumer
confidence in the U.S. and domestic retail markets.
The company aims to maintain high railroading (velocity,
reliability, lowers costs and asset utilization) standards. In
addition, Canadian National is continuously pursuing productivity
initiatives to grow steadily, reduce costs and leverage its assets
to improve shareholders' return. The company has equipped its
locomotives with advanced technologies like Trip Optimizer and
Wi-Tronix to increase fuel efficiency.
Moreover, Canadian National Railway has surpassed the Zacks
Consensus Estimate in three of the last four quarters, with an
average earnings surprise of 2.8%.
In the last concluded quarter, the company reported adjusted
earnings per share of 60 cents, beating the Zacks Consensus
Estimate of 57 cents. The bottom line also increased 8% year over
year on higher freight rates and volumes. Quarterly revenues
increased 9% year over year to $2,443 million and surpassed the
Zacks Consensus Estimate of $2,511 million. The year-over-year
growth was attributable to favorable currency fluctuations, higher
freight pricing, volumes and fuel surcharge. The company's shares
have jumped more than 5% after it announced its previous quarter
In the near term, we expect growth in shipment related to
automotive, housing and grains to drive revenues. Strong
crude-by-rail, expected market gains from frac sand and investments
in infrastructure should boost Canadian National Railway's
Despite the strong price appreciation, this Zacks Rank #3 (Hold)
stock has plenty of upside left, given the positive estimate
revisions witnessed over the past 60 days. In the last 60 days, the
company has witnessed upward revisions with the Zacks Consensus
Estimate for earnings moving up by 1.3% to $3.23. Notably, the
current year earnings growth rate for the stock is 17.90%, which is
higher than the industry growth rate of 16.80%.
Other Stocks to Consider
Some better-ranked stocks within the sector include
Kansas City Southern
Union Pacific Corporation
). GATX sports a Zacks Rank #1 (Strong Buy), whereas Kansas City
Southern and Union Pacific hold a Zacks Rank #2 (Buy).
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CDN NATL RY CO (CNI): Free Stock Analysis
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