Canadian National (CNI) Q3 Earnings & Revenues Lag Estimates

Canadian National Railway Company'sCNI third-quarter 2017 earnings per share (excluding 3 cents from non-recurring items) of $1.05 (C$1.31) fell short of the Zacks Consensus Estimate of $1.06. The bottom line however, climbed 9.4% from the year-ago figure.

Quarterly revenues of $2,576.8 million (C$3,221) also lagged the Zacks Consensus Estimate of $2,620.7 million but increased 11.5% year over year. Rail freight revenues, accounting for bulk of the top line in the quarter, improved 7%. The top line got a boost from increased volumes in segments namely, Overseas Intermodal, Frac sand, Coal and Petroleum coke exports, and Canadian grain.

Operating Results

On a year-over-year basis, freight revenues increased in segments like Metals and Minerals (31%), Coal (23%), Intermodal (12%) and Automotive (4%). However, the same declined in segments like Forest Products (2%) and Grain and Fertilizers (1%). Petroleum and Chemicals revenue remained flat year over year. Overall, carloads (volumes) expanded 11% and revenue ton miles (RTMs) rallied 10% year over year. Rail freight revenues per carload declined 4%in the reported quarter.

The Metals and minerals sub group performed most impressively with respect to car loads that surged 23%. The other segment to report double-digit volume growth is Intermodal, showing a 20% rise. Petroleum and Chemicals segment reported an increase of 3% year over year. However, Forest Products and Coal volumes decreased 2% and 7%, respectively. Grain and Fertilizers, and Automotive volumes contracted 3% each.

In the quarter under review, operating income grew 3.7% year over year to C$1,459. Operating ratio (defined as operating expenses as a percentage of revenues) was 54.7% compared with 53.3% in the year-ago quarter. Higher fuel costs contributed to this key metric's deterioration.

Canadian National Railway Company Price, Consensus and EPS Surprise

Canadian National Railway Company Price, Consensus and EPS Surprise | Canadian National Railway Company Quote


This Zacks Rank #3 (Hold) company exited the third quarter with free cash flow of C$662 million compared with C$574 million a year ago. Adjusted debt at the end of the quarter was C$10,894 million compared with C$11,245 million a year ago. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .


Canadian National continues to expect full-year 2017 earnings per share in the band of C$4.95-C$5.10 compared with C$4.59 a year ago.

Upcoming Releases

Investors interested in the broader Transportation sector are keenly awaiting third-quarter earnings reports from key players like American Airlines Group, Inc. AAL , Southwest Airlines Company LUV and Union Pacific Corporation UNP . All are scheduled to report their respective earnings numbers on Oct 26.

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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 Nasdaq, Inc.

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

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