Canadian National Railway Meets 3Q17 Estimates, Stock Rose 1.7%
By Samuel PrinceUpdated
CNI’s 3Q17 earnings
On October 24, 2017, Canada’s largest freight rail, Canadian National Railway (CNI), released its 3Q17 results after the markets closed. CNI posted adjusted EPS (earnings per share) of $1.31 Canadian, just short of the Thomson Reuters–surveyed analyst estimate of $1.32 Canadian.
Canadian National’s 3Q17 diluted earnings of $1.31 Canadian were up 5.0% from $1.25 Canadian on a year-over-year basis.
CNI’s stock performance
In the third quarter of 2017, Canadian National Railway led its industry peers in terms of YoY (year-over-year) freight volume growth. The company attracted the attention of Wall Street analysts with its steady freight volume growth. Unlike its US counterparts, the company has a positive view about the remainder of 2017.
On October 24, 2017, CNI stock jumped 1.7% to close at $83.10. The Montreal-headquartered Class I railroad’s stock is trading near its 52-week high of $84.50 posted on July 12, 2017. The performance of CNI’s peers on the same day follow:
- Canadian Pacific Railway (CP): rose marginally
- Union Pacific (UNP): fell 0.3%
- Kansas City Southern (KSU): fell 1.9%
- Norfolk Southern (NSC): rose 0.3%
- CSX (CSX): rose 0.4%
- Genesee & Wyoming (GWR): rose 0.5%
The Industrial Select Sector SPDR ETF (XLI) rose 0.6% on October 24, 2017. Major US railroads and airline companies make up 9.2% and 11.6%, respectively, of XLI’s portfolio holdings.
Management’s outlook
Ghislain Houle, CFO of Canadian National Railway, noted during the company’s 3Q17 earnings call, “We continue to experience a strong Canadian dollar versus the U.S. dollar. And assuming that the current spot rate of around $0.80, this will remain a headwind on earnings going forward.
“As a reference, $0.01 appreciation in the Canadian dollar versus the U.S. dollar results in an annual headwind on net income of approximately $30 million or $0.04 of EPS. We remain confident about achieving our guidance and continually expect to deliver adjusted earnings per share in the range of $4.95 to $5.10 versus 2016 adjusted diluted EPS of $4.59.”
In this 3Q17 post-earnings series, we’ll dive into CNI’s segmental results. In the final part of the series, we’ll review the recommendations of Thomson Reuters–polled analysts on the CNI and its peers.
