Core Insights - CN's President and CEO, Tracy Robinson, will speak at the 25th Annual Scotiabank Transportation and Industrials Conference on November 18, 2025, at 8:00 a.m. ET [1] - CN operates a nearly 20,000-mile rail network, transporting over 300 million tons of goods annually across North America [2] Company Overview - CN has been contributing to sustainable trade and community prosperity since 1919 [2] - The company connects Canada's Eastern and Western coasts with the U.S. Midwest and Gulf Coast [2] Event Details - A live webcast of the conference will be available on CN's investor relations website, with a replay accessible after the event [1]

Core Insights - The Canadian National Railway Company (CNI) is identified as a defensive value buy that can stabilize portfolios against AI-led disruptions [1] Group 1: Company Analysis - CNI meets the criteria for an AI-resistant stock, making it a suitable investment option during times of technological upheaval [1] Group 2: Analyst Background - The analysis is conducted by a stock analyst with over 20 years of experience in quantitative research, financial modeling, and risk management, emphasizing a focus on equity valuation and market trends [1] - The analyst has a background as a former Vice President at Barclays, leading teams in model validation and stress testing, which contributes to a deep expertise in both fundamental and technical analysis [1] - The research is co-authored with a partner, combining strengths to deliver high-quality, data-driven insights with a long-term perspective on value creation [1]

Core Viewpoint - The article discusses a buy-the-dip opportunity for Canadian National Railway (CNI) amid significant tariff uncertainties affecting its stock performance [1]. Group 1: Company Analysis - Canadian National Railway (CNI) has faced stock price declines due to tariff uncertainties, which have raised concerns about its future performance [1]. - The investment philosophy emphasizes identifying undervalued companies with strong growth potential, focusing on long-term value and disciplined research [1]. Group 2: Investment Strategy - The strategy involves leveraging deep industry insights and rigorous analysis to uncover investment opportunities that can deliver strong returns [1]. - The company aims to provide actionable investment ideas that withstand the test of time, highlighting risks that may impact the investment thesis [1].

Core Viewpoint - The article emphasizes the importance of enabling Javascript and cookies in browsers to prevent access issues, particularly when ad-blockers are enabled [1] Group 1 - The article suggests that users may face restrictions if they have ad-blockers enabled, indicating a need for adjustments in browser settings [1]

Core Viewpoint - The proposed merger between Union Pacific and Norfolk Southern, valued at $85 billion, is viewed negatively by Canadian railroads, including Canadian Pacific Kansas City and Canadian National, who argue it will harm the industry and reduce customer options [1][2]. Group 1: Industry Concerns - CPKC stated that the merger is "not in the public interest," "unnecessary," and would dominate rail transportation markets, limiting customer choices [2]. - CN's president emphasized that the industry does not require a merger to enhance service, advocating for more cooperation instead of consolidation [3]. - Both CPKC and CN have launched campaigns urging shippers to voice their opposition to the merger to the Surface Transportation Board (STB) [2][3]. Group 2: Regulatory Process - Union Pacific and Norfolk Southern plan to submit their merger application to the STB by early December, seeking to expedite the review process by requesting a 45-day reduction [4]. - The STB's review is anticipated to take between 17 to 22 months, with the timeline for shippers to file notices typically set for 45 days post-application submission [4]. - CPKC's CEO has called for a thorough review of the merger application, indicating that a comprehensive evaluation cannot be completed in less than 16 to 17 months [5][6].

Core Insights - Canadian National (CNI) reported quarterly earnings of $1.33 per share, exceeding the Zacks Consensus Estimate of $1.28 per share, and showing an increase from $1.26 per share a year ago, resulting in an earnings surprise of +3.91% [1] - The company generated revenues of $3.02 billion for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 0.98%, and showing a slight increase from $3.01 billion year-over-year [2] - The stock has underperformed the market, losing about 8.1% since the beginning of the year compared to the S&P 500's gain of 16% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $1.45 on revenues of $3.23 billion, and for the current fiscal year, it is $5.40 on revenues of $12.43 billion [7] - The estimate revisions trend for CNI was unfavorable prior to the earnings release, resulting in a Zacks Rank 5 (Strong Sell) for the stock, indicating expected underperformance in the near future [6] Industry Context - The Transportation - Rail industry, to which CNI belongs, is currently in the bottom 10% of over 250 Zacks industries, suggesting a challenging environment for stocks in this sector [8]

Financial Data and Key Metrics Changes - The company reported a 6% growth in EPS, reaching $1.83 compared to $1.72 in the previous year [27] - Revenues increased by 1% year-over-year, driven by a 1% rise in RTMs and a 5% increase in carloads [21][27] - The operating ratio improved by 170 basis points to 61.4%, compared to 63.1% in the previous year [27] Business Line Data and Key Metrics Changes - Volume growth was approximately 1% in RTMs and 5% in carloads, although overall volumes were softer than expected, particularly in merchandise segments due to macroeconomic and tariff pressures [11][21] - Intermodal volumes increased, with domestic units up 18% and international units up 14% [24] - Petroleum and chemical volumes rose across major segments, with plastics and chemical RTMs up 8% [23] Market Data and Key Metrics Changes - The Canadian grain harvest is expected to be a record crop, despite a slower start [22] - Forest products, particularly lumber, saw a year-over-year decline due to weak demand and increased duties [23] - The company experienced market share gains in chemicals and plastics, with recent successes in domestic intermodal [24][25] Company Strategy and Development Direction - The company is focusing on a capital spend of $2.8 billion for 2026, down nearly $600 million from the current year's level, to address capacity bottlenecks and optimize fleet size [5][20] - There is an emphasis on enhancing shareholder value through increased free cash flow and accelerated share buybacks [7][8] - The company is committed to operational efficiency and productivity improvements, targeting a reduction of $75 million in management labor costs [6][11] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by a weak macroeconomic environment and unexpected shocks from tariffs and labor [4][9] - The outlook for 2026 indicates limited volume growth, with expectations of a weak North American industrial production and housing starts [9][32] - Management expressed confidence in the company's ability to adapt and find growth opportunities despite external challenges [10][66] Other Important Information - The company has seen a 14% increase in free cash flow year-to-date, with expectations for continued acceleration into 2026 [11][31] - The company is actively participating in merger reviews to protect its franchise and competition in the industry [12] Q&A Session Summary Question: Concerns about CapEx cuts and capacity - Management reassured that the capital cuts will not jeopardize capacity, as significant growth opportunities have already been addressed [36][39] Question: Opportunities in commercial strategy for 2026 - Management highlighted a diversified book of business and ongoing efforts to drive market share gains, particularly in energy and agriculture [43][45] Question: Risks associated with M&A activity - Management emphasized that further consolidation may not be beneficial for the industry and expressed readiness to protect their network if necessary [48][51] Question: Challenges in forecasting - Management acknowledged the difficulties in forecasting due to macroeconomic volatility and emphasized the need for agility in responding to changes [56][58]

Financial Performance - Q3 2025 total revenues reached $4.2 billion, a 1% increase compared to Q3 2024 [16, 38] - Diluted EPS grew by 6% to $1.83 in Q3 2025 [15, 16, 52] - The operating ratio improved by 170 bps to 61.4% in Q3 2025 [16, 52] - The company executed $1 billion in share repurchases [54] Operational Efficiency - RTMs (Revenue Ton Miles) increased by 1% in Q3 2025 [15, 16, 38, 54] - Carloads increased by 5% in Q3 2025 [38, 54] - Train length increased by 3% in Q3 2025 compared to Q3 2024 [25] - GTMS/T&E (Train and Engine) employee decreased by 20% in Q3 2025 compared to Q3 2024 [27] Outlook and Strategy - The company reaffirms its full-year EPS guidance, expecting mid-to-high single-digit adjusted diluted EPS growth compared to 2024 [61] - The outlook for 2025 capital expenditures is $3.35 billion, and the 2026 outlook is $2.8 billion, a $550 million reduction [61]

Core Insights - Canadian National Railway reported an increase in third-quarter profit and revenue driven by higher freight volumes transported [1] Financial Performance - The company experienced a rise in profit and revenue in the third quarter [1] - The increase in freight volumes contributed significantly to the financial performance [1]

Financial Performance - Revenues of $4,165 million, an increase of $55 million, or 1% compared to Q3 2024[12] - Operating income of $1,606 million, an increase of $91 million, or 6% compared to Q3 2024[12] - Net income for Q3 2025 was $1,139 million, a 5% increase from $1,085 million in Q3 2024, with diluted earnings per share rising by 6% to $1.83[28] - Free cash flow for Q3 2025 was $793 million, a significant increase of 36% from $584 million in Q3 2024[26] - Total revenues for Q3 2025 were $4,165 million, a 1% increase from $4,110 million in Q3 2024, while total revenues for the nine months ended September 30, 2025 were $12,840 million, also a 1% increase from $12,688 million in the same period of 2024[48] Operating Metrics - Operating ratio improved by 1.7 points to 61.4%[12] - The operating ratio improved to 61.4% in Q3 2025 from 63.1% in Q3 2024, reflecting better cost management[27] - The operating ratio for Q3 2025 improved to 61.4%, down from 63.1% in Q3 2024, and for the nine months ended September 30, 2025, it was 62.2%, compared to 63.6% in the same period of 2024[43] - The company expects continued improvements in operating metrics due to fewer network disruptions and a focus on scheduled operating plans[32] Revenue Breakdown - Revenues for Q3 2025 were $4,165 million, a 1% increase from $4,110 million in Q3 2024, driven by higher volumes and freight revenue per RTM[26] - Freight revenues for Q3 2025 were $3,991 million, a 2% increase from $3,922 million in Q3 2024, while for the nine months ended September 30, 2025, freight revenues were $12,369 million, up 1% from $12,212 million in the same period of 2024[48] - Petroleum and chemicals revenues increased by $15 million, or 2%, in Q3 2025, while revenues for the first nine months increased by $31 million, or 1%[54] - Metals and minerals revenues decreased by $25 million, or 5%, in Q3 2025, and by $64 million, or 4%, in the first nine months of 2025, primarily due to lower volumes[55][58] - Coal revenues increased by $8 million, or 3%, in Q3 2025, and by $34 million, or 5%, in the first nine months of 2025, mainly due to higher volumes[63] Expenses and Costs - Operating expenses for Q3 2025 were $2,559 million, a decrease of $36 million, or 1%, compared to Q3 2024, attributed to lower fuel prices[73] - Fuel expenses decreased by $101 million, or 19%, in Q3 2025, primarily due to lower fuel prices and the elimination of the Canadian federal carbon tax program[77] - The company reported a 20% decrease in fuel expenses for Q3 2025, amounting to $418 million, compared to $519 million in Q3 2024[47] Capital and Investments - The company expects to invest approximately $3.35 billion in its capital program in 2025[21] - Capital expenditures for Q3 2025 totaled $1,105 million, a decrease from $1,176 million in Q3 2024[111] Shareholder Returns - The company repurchased 7.7 million common shares for $1,041 million at a weighted-average price of $134.77 per share in Q3 2025, compared to 2.5 million shares for $427 million at $165.40 per share in Q3 2024[119] - Total dividends paid amounted to $550 million in Q3 2025, up from $532 million in Q3 2024, reflecting an increase in the quarterly dividend rate from $0.8450 to $0.8875 per share[122] Debt and Obligations - As of September 30, 2025, the company had total contractual obligations of $38,943 million, including $21,114 million in debt obligations[123] - The adjusted debt-to-adjusted EBITDA multiple was 2.54 times for the twelve months ended September 30, 2025, compared to 2.51 times for the same period in 2024[128] Risk Factors - The imposition of tariffs by the U.S. administration on imports and retaliatory tariffs by other countries presents significant risks to global trade, potentially impacting demand for rail services[170] Internal Controls and Compliance - The Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of September 30, 2025[172] - There were no changes in the Company's internal control over financial reporting that materially affected its effectiveness during the third quarter ended September 30, 2025[173]