Revenue Challenges - Canadian National Railway is experiencing revenue pressure primarily due to rising tariffs on high-margin merchandise and forest products [1] - There is a shift in the product mix towards lower-margin bulk commodities, further impacting revenue [1] Analyst Background - The analyst has over 15 years of experience in investment and research services, focusing on mid-sized hedge funds with assets between $100 million and $500 million [1] - The analyst has a background in analyzing industrial, consumer, and technology sectors, indicating a generalist approach with higher conviction in these areas [1]

Join iREIT on Alpha today to get the most in-depth research that includes REITs, mREITs, Preferreds, BDCs, MLPs, ETFs, and other income alternatives. 438 testimonials and most are 5 stars. Nothing to lose with our FREE 2-week trial . Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole ...

Core Insights - Canadian National Railway Company (CNI) reported second-quarter 2025 results with earnings and revenues falling short of Zacks Consensus Estimate, leading to a 4.9% decline in stock price since the earnings release on July 22 [1] Financial Performance - Earnings per share (EPS) were $1.35 (C$1.87), missing the Zacks Consensus Estimate of $1.37 and remaining flat year-over-year [3] - Revenues for Q2 2025 were $3.09 billion (C$4.3 billion), below the Zacks Consensus Estimate of $3.16 billion, and declined 2.4% year-over-year [3] - Revenue ton-miles (RTMs) decreased by 1% year-over-year, while carloads dropped by 0.4% [4] - Operating expenses fell by 5.2% year-over-year due to cost-cutting measures [4] - Operating income grew by 4.9% compared to Q2 2024, with the operating ratio improving by 0.5 points to 61.7% [5] Segment Performance - Freight revenues, which accounted for 95.7% of total revenues, decreased by 1.5% year-over-year [6] - Specific declines in freight revenues included petroleum and chemicals (-5%), metals and minerals (-7%), forest products (-8%), intermodal (-3%), and automotive (-6%) [6] - Revenues from grain and fertilizers increased by 13% year-over-year, while coal revenues remained flat [6][7] Liquidity and Capital Management - CNI ended Q1 2025 with cash and cash equivalents of C$216 million, down from C$389 million at the end of Q4 2024 [9] - Long-term debt decreased to C$19.3 billion from C$19.7 billion at the end of December 2024 [9] - CNI generated C$1.75 billion from operating activities, with free cash flow at C$922 million [9] - Under its current Normal Course Issuer Bid (NCIB), CNI may repurchase up to 20 million common shares, having repurchased 2.2 million shares for $300 million as of March 31, 2025 [10] Outlook - For full-year 2025, CNI anticipates mid to high-single-digit adjusted EPS growth, revised down from a previous guidance of 10%-15% [11] - CNI plans to invest approximately C$3.4 billion in its capital program, net of customer reimbursements [11] - The company has withdrawn its financial outlook for the 2024-2026 period due to macroeconomic uncertainty [11]

Group 1 - Canadian National Railway Co. (CNR) is expected to meet its FY25 EPS guidance, supported by visible growth drivers [1] - The author has a diverse investing background, utilizing fundamental, technical, and momentum investing approaches to enhance the investment process [1] - The article serves as a performance tracker for investment ideas and aims to connect with like-minded investors [1] Group 2 - There are no disclosed stock, option, or derivative positions in any mentioned companies, nor plans to initiate such positions in the near term [2] - The article reflects the author's personal opinions and is not compensated beyond the platform used for publication [2] - Seeking Alpha does not provide investment recommendations and the views expressed may not represent the platform as a whole [3]

Core Viewpoint - The article emphasizes the importance of identifying high-quality businesses with strong fundamentals and fair valuations for investment opportunities [1]. Group 1: Company Characteristics - The focus is on companies that possess wide moats, high efficiency, strong cash flows, and healthy balance sheets [1]. - The writer seeks to find "wonderful companies" that are available at fair prices, indicating a value-oriented investment approach [1]. Group 2: Investment Philosophy - The article invites opposing views to refine investment ideas, highlighting the importance of critical analysis in investment decision-making [1]. - The writer expresses a commitment to independent analysis, suggesting that personal opinions are prioritized over external influences [2].

Group 1 - Citigroup has lowered the target price for Canadian National Railway Company from $123 to $121 [1]

花旗集团将 加拿大国家铁路公司目标价从123美元下调至121美元。 ...

分组1 - Canadian National (CNI) reported quarterly earnings of $1.35 per share, missing the Zacks Consensus Estimate of $1.37 per share, with an earnings surprise of -1.46% [1] - The company posted revenues of $3.09 billion for the quarter ended June 2025, missing the Zacks Consensus Estimate by 2.16%, compared to year-ago revenues of $3.16 billion [2] - Over the last four quarters, CNI has surpassed consensus EPS estimates just once and topped consensus revenue estimates only once [2] 分组2 - CNI shares have lost about 1.9% since the beginning of the year, while the S&P 500 has gained 7.2% [3] - The company's earnings outlook is crucial for investors, including current consensus earnings expectations for upcoming quarters [4] - The current consensus EPS estimate for the coming quarter is $1.41 on revenues of $3.16 billion, and $5.66 on revenues of $12.88 billion for the current fiscal year [7] 分组3 - The Zacks Industry Rank indicates that the Transportation - Rail industry is currently in the top 14% of over 250 Zacks industries, suggesting a favorable outlook [8] - Canadian Pacific Kansas City (CP), another company in the same industry, is expected to report quarterly earnings of $0.82 per share, reflecting a year-over-year change of +6.5% [9] - CP's revenues are anticipated to be $2.79 billion, up 5.8% from the year-ago quarter [10]

Financial Data and Key Metrics Changes - The company reported adjusted EPS growth of 2% for Q2 2025, reaching $1.87 compared to $1.84 in the previous year [41] - Revenues decreased by 1% year over year, attributed to a 1% reduction in RTMs and flat carloads [29][41] - Operating ratio improved by 50 basis points to 61.7% from 62.2% in the previous year [41] Business Line Data and Key Metrics Changes - Bulk volumes showed strong performance, while merchandise and intermodal segments faced challenges due to tariffs and a weaker industrial economy [8][12] - Petroleum and chemicals experienced lower volumes due to refinery turnarounds, impacting overall performance [31] - Grain and fertilizers were a bright spot, with revenues increasing by 12%, driven by higher grain shipments [34] Market Data and Key Metrics Changes - The company noted a shift in traffic mix, with less merchandise business impacting revenues and margins [8][30] - International intermodal traffic through Prince Rupert showed good progress, while Vancouver faced challenges [52] - The tariff environment has created uncertainty, particularly affecting forest products and metals [11][36] Company Strategy and Development Direction - The company is focused on leveraging its diversified book of business and maintaining strong partnerships with customers [12][15] - Efforts are underway to develop better access to global markets, particularly in the energy sector [12] - The company is adjusting its expectations for low single-digit RTM growth for the remainder of the year due to ongoing uncertainties [15][45] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns over the tariff and trade environment, indicating that uncertainty may persist in the near term [11][15] - The company is proactively managing costs and resources to maintain margins amid changing volumes [19][41] - There is optimism about the potential for growth in the second half of the year, particularly in intermodal and bulk segments [36][47] Other Important Information - The Canadian carbon tax surcharge repeal impacted revenues by approximately $70 million in Q2 [30] - The company generated over $1.5 billion in free cash flow, up 5% year over year, primarily due to lower capital expenditures [43] - The company is revising its full-year volume assumption to low single-digit RTM growth due to the current macroeconomic environment [45] Q&A Session Summary Question: Progress on U.S.-bound international intermodal traffic through Prince Rupert - Management noted that overseas intermodal via Canada to the U.S. represents less than 5% of total revenues, with good progress at Prince Rupert but challenges at Vancouver [52] Question: Challenges or changes in optimism around company-specific initiatives - Management affirmed that company-specific initiatives remain intact, with growth fundamentals strong despite current tariff uncertainties [60][61] Question: RTM guidance for the second half of the year - Management expects volumes to accelerate as refinery outages resolve and anticipates a seasonal uptick in grain shipments [68][69] Question: Proactive changes in response to mix - Management highlighted strong bulk volumes and the need to manage costs tightly in response to volume shifts, with a focus on maintaining operational efficiency [73][78] Question: CapEx management and competitive access in potential mergers - Management is closely monitoring CapEx, reducing it by $50 million, while ensuring competitive access is defended in any merger discussions [82][84]

Financial Data and Key Metrics Changes - The company reported a 2% adjusted EPS growth for Q2 2025, with revenues down 1% year over year on a 1% decrease in RTMs and flat carloads [4][27][40] - Operating ratio improved by 50 basis points to 61.7% compared to last year's adjusted operating ratio of 62.2% [40] - Free cash flow generated was over $1.5 billion, up 5% year over year, primarily due to lower capital expenditures [42] Business Line Data and Key Metrics Changes - Bulk volumes were strong, reflecting the company's advantage in the agricultural sector, while merchandise and intermodal segments faced challenges due to tariffs and a weaker industrial economy [5][12] - Petroleum and chemicals experienced lower volumes due to refinery turnarounds, while grain and fertilizers saw a 12% increase in revenues, with grain volumes up 6% in Canada and nearly 30% in the U.S. [32][28] - Intermodal volumes were mixed, with a 4% decline in units through Vancouver but a 14% increase in Prince Rupert units [33] Market Data and Key Metrics Changes - The company noted ongoing uncertainty in the tariff and trade environment, particularly affecting forest products, metals, and automotive sectors [8][10] - The Canadian carbon tax repeal impacted revenues by approximately $70 million in Q2, expected to continue affecting the next three quarters [28] - Foreign exchange provided a slight tailwind to revenue of less than 1% [28] Company Strategy and Development Direction - The company is focused on leveraging its diversified book of business and maintaining strong partnerships with customers to navigate the uncertain environment [10][11] - Efforts are underway to enhance access to global markets, particularly in the energy sector, and to mitigate tariff impacts by finding alternative routes for affected commodities [11][12] - The company is adjusting its expectations for the remainder of the year to low single-digit RTM growth due to the current economic environment [13][44] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding the second half of the year, citing broader ranges of outcomes and persistent softness in certain sectors [10][13] - The company remains committed to controlling costs and maintaining operational efficiency despite external challenges [15][22] - Management believes that the fundamentals of growth remain intact, with expectations for a rebound in volumes as tariff situations stabilize [59][85] Other Important Information - The company ended the quarter with 8,000 system cars in storage, which is double the amount at the end of Q1, allowing for flexibility in response to volume changes [22] - Locomotive availability improved to 92.5%, with an 8% reduction in locomotive unit costs year over year [23] - The company is revising its guidance for mid to high single-digit EPS growth in 2025, reflecting the impact of tariffs and economic conditions [44] Q&A Session Summary Question: Progress on U.S.-bound international intermodal traffic through Prince Rupert - Management noted that overseas intermodal via Canada to the U.S. represents less than 5% of total revenues, with good progress at Prince Rupert but challenges at Vancouver due to tariff deadlines [51][52] Question: Challenges or changes in optimism around company-specific initiatives - Management affirmed that company-specific initiatives remain intact, with a focus on leveraging network advantages despite current tariff uncertainties [58] Question: RTM guidance for the second half of the year - Management expects volumes to accelerate as refinery outages resolve and anticipates a ramp-up in grain crop shipments in September [66] Question: Proactive changes in response to volume mix - Management highlighted strong bulk volumes and the need to manage costs tightly, with a focus on maintaining operational efficiency [70][72] Question: CapEx and competitive access in potential merger scenarios - Management is closely monitoring CapEx and has reduced the budget while ensuring investments are aligned with growth opportunities [78][80] Question: Confidence in achieving volume growth in 2026 - Management expressed uncertainty regarding tariff resolutions but remains focused on maintaining strong growth fundamentals [85]