Canadian National Railway
) reported third quarter 2013 adjusted earnings per share of
C$1.72 (approximately $1.66), comfortably beating the Zacks
Consensus Estimate of $1.58. The results also increased 13% year
over year on higher freight rates and volumes.
Quarterly revenues increased 8% year over year to C$2,698
million (approximately $2,596 million) and surpassed the Zacks
Consensus Estimate of $2,557 million. The year-over-year growth
was attributable to higher freight carloads based on strong
energy markets, market share gains, as well as gradual recovery
in the North American economy.
Carloads (volumes) increased 3% year over year and revenue ton
miles, which measures the relative weight and distance of rail
freight transported by Canadian National, moved up 4% from the
On a year-over-year basis, revenues increased 17% for
Petroleum and Chemicals, 13% for Intermodal, 11% for Metals and
Minerals, 8% for Forest Products and 7% for Automotive. Coal as
well as Grain and Fertilizers registered a revenue decline of 1%
and 3% year over year, respectively.
In the third quarter, adjusted operating income improved 10%
year over year to C$1,084 million (approximately $1,043 million),
despite operating expenses increasing 6.7% year over year to
C$1,614 million (approximately $1,553 million). Operating ratio
(defined as operating expenses as a percentage of revenues) was
59.8%, down 80 basis points.
As of Sep 30, 2013, Canadian National had cash and cash
equivalents of C$182 million ($177.9 million). The company had
long-term debt (including current portion) of C$7,498 million
($7,328 million), representing debt-to-total capitalization ratio
of 39.3%. Free cash flow for the quarter was C$341 million ($328
Canadian National expects growth in 2013 to be driven by
upward trends in the North American economic scenario, with
carload projected to improve 2-3%. The company expects North
American industrial production to grow 2%. U.S. housing starts
are estimated approximately 950,000 units, and U.S. motor
vehicles sale is expected at 15 million units. Canadian grain
production U.S. grain production is projected to remain above the
The company estimates capital expenditure of C$2 billion.
We believe Canadian Nationalis well poised to reap benefits
from improving demand and pricing trends. The company's
industry-leading operating ratio, service improvements and
expected growth across the board, in particular Intermodal, Crude
and Automotive, bode well for its projected earnings growthover
the next few months. However, several headwinds such as
competitive threats and uncertainties in the market condition of
some of the product lines may limit the upside potential of the
Canadian National which operates with other players like
Canadian Pacific Railway
Norfolk Southern Corporation
) has a Zacks Rank #3 (Hold).
CDN NATL RY CO (CNI): Free Stock Analysis
CDN PAC RLWY (CP): Free Stock Analysis Report
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NORFOLK SOUTHRN (NSC): Free Stock Analysis
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