Canadian National Stock Falls 4.9% Since Q2 Earnings & Revenue Miss

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to invest approximately C$3.4 billion in its capital program, net of customer reimbursements [11] - The company has withdrawn its financial outlook for the 2024-2026 period due to macroeconomic uncertainty [11]