Key Takeaways CNI moved 3.28M tonnes of Western Canada grain in November, setting a new monthly record.The record marks a third consecutive month of strong grain movement for CNI.CNI's Winter Plan outlines steps to boost reliability and minimize weather disruptions.Canadian National Railway (CNI) set a new record for grain movement in November 2025. The company has transported more than 3.28 million metric tonnes of grain from Western Canada in November 2025, marking an increase of 230,000 metric tonnes fro ...

Key Takeaways Canadian Pacific faces downward earnings revisions and weak share performance over the past year.CP's operating expenses rose in 2025, driven by labor agreements despite lower fuel costs.CP carries high leverage with limited cash and operates in a weakly ranked rail industry.Canadian Pacific Kansas City Limited (CP) is currently mired in multiple headwinds, which, we believe, have made it an unimpressive investment option.Let’s delve deeper.Key Risks to WatchSouthward Earnings Estimate Revisio ...

Core Insights - Canadian National Railway (CNI) is facing significant challenges that are adversely affecting its financial stability, primarily due to increased operating expenses and weak liquidity, making it less attractive for investors [1][6]. Financial Performance - The Zacks Consensus Estimate for CNI's current quarter earnings has been revised downward by 6% over the past 60 days, and for 2025, the estimate has been cut by 2.7% in the same period [1]. - CNI's stock price has decreased by 18.7% over the past year, which is a stark contrast to the Transportation - Rail industry's decline of 7.6% [2][6]. Industry Position - CNI currently holds a Zacks Rank of 5 (Strong Sell), indicating a weak position in the market [4]. - The industry rank for CNI is 211 out of 243, placing it in the bottom 13% of Zacks Industries, which suggests a challenging environment for the company [4]. Earnings Surprise History - CNI has a disappointing earnings surprise history, having underperformed the Zacks Consensus Estimate in two of the last four quarters, with an average miss of 0.07% [5]. Operating Expenses and Liquidity - The company's operating expenses are projected to rise from $10.27 billion in 2022 to $10.8 billion in 2024, which is straining profitability and operational efficiency [7]. - CNI's current ratio has remained below one for several years, indicating insufficient short-term assets to cover short-term liabilities. The ratio fell from 0.84 in 2022 to 0.61 in 2023, slightly improved to 0.66 in 2024, but declined again to 0.60 in Q3 2025 [8].

Core Viewpoint - The Zacks Transportation - Rail industry is facing multiple challenges, including tariff-induced economic uncertainties, inflationary pressures, high interest rates, and supply-chain disruptions. However, Union Pacific Corporation and CSX Corporation are positioned to navigate these challenges effectively, aided by declining fuel costs which support bottom-line growth [1]. Industry Description - The Zacks Transportation - Rail industry comprises railroad operators that transport various freight types across North America, focusing on logistics and supply-chain services. Revenue primarily comes from freight, with some companies also earning from rail-related services like repairs and land sales [2]. Factors Deciding the Industry's Outlook - Strong financial returns for shareholders are evident as companies increase dividends and buybacks, reflecting financial strength. CSX announced an 8.3% quarterly dividend increase, while Union Pacific raised its quarterly cash dividend by 3% to $1.38 per share [3]. - The decline in oil prices, which fell nearly 20% from the beginning of 2025, is a positive factor for the industry as it reduces fuel expenses, a significant cost for transportation companies [4]. - Economic uncertainty persists due to tariff policies that disrupt supply chains and increase costs, creating challenges for the industry and affecting investor sentiment [5]. Industry Performance and Valuation - The Zacks Transportation - Rail industry currently holds a Zacks Industry Rank of 211, placing it in the bottom 13% of over 250 Zacks industries, indicating gloomy near-term prospects [6][7]. - Over the past year, the industry has underperformed the S&P 500, declining 8.3% compared to the S&P 500's increase of 12.9%, while the broader sector fell by 15.5% [9][10]. - The industry is trading at a trailing 12-month price-to-book (P/B) ratio of 5.82X, lower than the S&P 500's 8.19X but above the sector's 3.12X [13]. Company Insights - Union Pacific, based in Omaha, NE, is well-positioned for growth due to stable e-commerce demand, cost-cutting efforts, and a strong track record of earnings surprises, having surpassed the Zacks Consensus Estimate in three of the past four quarters [17][18]. - CSX, located in Jacksonville, FL, anticipates total volume growth for 2025, focusing on operational excellence and efficiency initiatives, with capital expenditures projected at $2.5 billion this year [21][22]. CSX has also surpassed the Zacks Consensus Estimate in two of the past four quarters [23].

Core Insights - Canadian Pacific Kansas City Limited (CP) is experiencing increased expenses and tariff-related challenges, making it less attractive for investors [1][9] Financial Performance - The Zacks Consensus Estimate for CP's earnings has been revised downward by 2.33% for 2025 and 2.53% for 2026 over the past 60 days, indicating a lack of confidence from brokers [2] - CP's shares have declined by 4.7% over the past year, compared to a 3.7% decline in the Transportation - Rail industry [3][9] - Total operating expenses for CP in Q3 2025 were $2.33 billion, although they fell, they remained at a high level [6] Industry Context - CP currently holds a Zacks Rank of 4 (Sell), and the industry rank is 207 out of 243, placing it in the bottom 14% of Zacks Industries [5] - The performance of CP is significantly influenced by the overall industry, as studies indicate that 50% of a stock's price movement is related to its industry group [5][6] Challenges - CP is facing significant headwinds due to elevated expenses and a volatile macroeconomic environment characterized by economic uncertainty, shifting tariff regulations, and geopolitical tensions [7][9]

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]

Core Viewpoint - Canadian Pacific Kansas City (CP) reported quarterly earnings of $0.8 per share, slightly missing the Zacks Consensus Estimate of $0.81 per share, but showing an increase from $0.73 per share a year ago, indicating a mixed performance in earnings [1][2] Financial Performance - The company posted revenues of $2.66 billion for the quarter ended September 2025, which was below the Zacks Consensus Estimate by 0.62%, and an increase from $2.6 billion in the same quarter last year [2] - Over the last four quarters, Canadian Pacific Kansas City has surpassed consensus EPS estimates only once [2] Stock Performance - Since the beginning of the year, Canadian Pacific Kansas City shares have increased by approximately 2.8%, while the S&P 500 has gained 17.2%, indicating underperformance relative to the broader market [3] Future Outlook - The company's earnings outlook is crucial for assessing future stock performance, with current consensus EPS estimates at $1.00 for the coming quarter and $3.39 for the current fiscal year [7] - The estimate revisions trend for Canadian Pacific Kansas City was unfavorable prior to the earnings release, resulting in a Zacks Rank 4 (Sell), suggesting expected underperformance in the near future [6] Industry Context - The Transportation - Rail industry, to which Canadian Pacific Kansas City belongs, is currently ranked in the bottom 9% of over 250 Zacks industries, which may negatively impact stock performance [8]

Core Insights - Norfolk Southern (NSC) reported quarterly earnings of $3.3 per share, exceeding the Zacks Consensus Estimate of $3.18 per share, and showing a slight increase from $3.25 per share a year ago, resulting in an earnings surprise of +3.77% [1][2] - The company generated revenues of $3.1 billion for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 0.44% and reflecting a year-over-year increase from $3.05 billion [2] - Norfolk Southern's stock has increased approximately 23% since the beginning of the year, outperforming the S&P 500's gain of 13.9% [3] Earnings Outlook - The future performance of Norfolk Southern's stock will largely depend on management's commentary during the earnings call and the company's earnings outlook [4][5] - The current consensus EPS estimate for the upcoming quarter is $3.19, with expected revenues of $3.09 billion, and for the current fiscal year, the EPS estimate is $12.45 on revenues of $12.29 billion [7] Industry Context - The Transportation - Rail industry, to which Norfolk Southern belongs, is currently ranked in the bottom 10% of over 250 Zacks industries, indicating potential challenges ahead [8] - The performance of Norfolk Southern's stock may also be influenced by the overall outlook for the industry, as historical data shows that the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1 [8] Estimate Revisions - Prior to the earnings release, the estimate revisions trend for Norfolk Southern was unfavorable, resulting in a Zacks Rank 4 (Sell) for the stock, suggesting expected underperformance in the near future [6]

Core Insights - Union Pacific (UNP) reported quarterly earnings of $3.08 per share, exceeding the Zacks Consensus Estimate of $2.99 per share, and up from $2.75 per share a year ago, representing an earnings surprise of +3.01% [1][2] - The company generated revenues of $6.24 billion for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 0.16% and showing an increase from $6.09 billion year-over-year [2] - Union Pacific has outperformed consensus EPS estimates three times over the last four quarters and has topped revenue estimates twice in the same period [2] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $3.04 on revenues of $6.24 billion, while for the current fiscal year, the estimate is $11.74 on revenues of $24.66 billion [7] - The estimate revisions trend for Union Pacific was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Industry Context - The Transportation - Rail industry, to which Union Pacific belongs, is currently in the bottom 10% of over 250 Zacks industries, suggesting potential challenges for stock performance [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Core Insights - CSX reported quarterly earnings of $0.44 per share, exceeding the Zacks Consensus Estimate of $0.42 per share, but down from $0.46 per share a year ago, resulting in an earnings surprise of +4.76% [1][2] - The company generated revenues of $3.59 billion for the quarter ended September 2025, which was 0.22% below the Zacks Consensus Estimate and a decrease from $3.62 billion year-over-year [2] - CSX shares have increased by approximately 12.3% since the beginning of the year, compared to a 13.4% gain in the S&P 500 [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.44 on revenues of $3.61 billion, and for the current fiscal year, it is $1.65 on revenues of $14.21 billion [7] - The trend of estimate revisions for CSX was unfavorable prior to the earnings release, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6] Industry Context - The Transportation - Rail industry, to which CSX belongs, is currently ranked in the bottom 15% of over 250 Zacks industries, suggesting potential challenges for stocks in this sector [8] - Another company in the same industry, Norfolk Southern, is expected to report quarterly earnings of $3.18 per share, reflecting a year-over-year decline of 2.2%, with a revenue estimate of $3.09 billion, up 1.3% from the previous year [9][10]