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Canadian National (CNI) Q1 Earnings Miss Estimates, Rise Y/Y

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Canadian National Railway Company’s CNI first-quarter 2021 earnings (excluding 11 cents from non-recurring items) of 97 cents per share (C$1.23) missed the Zacks Consensus Estimate of 99 cents. However, the bottom line increased year over year on lower costs.

Quarterly revenues of $2,791.6 million (C$3,535 million) lagged the Zacks Consensus Estimate of $2,813.1 million. The top line, however, benefited from higher intermodal volumes and shipments of Canadian grain, and freight rate increases amid coronavirus-led weakness in other segments.

Freight revenues (C$3,423 million), which contributed 96.8% to the top line, were flat year over year. Freight revenues in Petroleum and chemicals, Metals and minerals, Forest products, Coal and Automotive declined 16%, 9%, 1%, 12% and 18%, respectively, in the first quarter. The same increased 17% and 14% in Grain and fertilizers, and Intermodal segments, respectively.

Canadian National Railway Company Price, Consensus and EPS Surprise

Canadian National Railway Company Price, Consensus and EPS Surprise
Canadian National Railway Company Price, Consensus and EPS Surprise

Canadian National Railway Company price-consensus-eps-surprise-chart | Canadian National Railway Company Quote

While overall carloads increased 7% year over year, revenue ton miles (RTMs) inched up 5%. Segment-wise, carloads in the Petroleum and chemicals, Metals and minerals, Forest products, Coal and Automotive declined 13%, 7%, 2%, 10% and 12%, respectively. Meanwhile, carloads in Grain and fertilizers, and Intermodal segments increased 17% and 23%, respectively. However, freight revenues per carload dropped 7% in the reported quarter. Freight revenues per RTM also fell 5%.

Operating expenses for the first quarter decreased 5% to C$2,208 million owing to a favorable currency impact among other factors. Adjusted operating income dipped 2.1% year over year to C$1,190 million. Adjusted operating ratio (defined as operating expenses as a percentage of revenues) deteriorated to 66.3% from the year-ago quarter’s figure of 65.7%. Notably, a smaller value of the metric is desirable.

Liquidity

This Zacks Rank #3 (Hold) company exited the first quarter of 2021 with cash and cash equivalents of C$518 million compared with C$569 million recorded at the end of 2020. The company generated free cash flow of C$539 million during the March quarter compared with the year-ago quarter’s C$573 million. Long-term debt amounted to C$12,252 million as of Mar 31, 2021 compared with C$11,996 million at December 2020-end. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

2021 Outlook

Canadian National anticipates earnings per share to grow in double-digits during 2021 from adjusted earnings of C$5.31 in 2020. Additionally, volumes, measured in revenue ton miles (RTMs), are expected to increase in high-single digits during 2021. Further, the company estimates free cash flow of C$3-C$3.3 billion in 2021 compared with C$3.2 billion in 2020.

Sectorial Snapshots

Within the broader Transportation sector, Delta Air Lines DAL, J.B. Hunt Transport Services JBHT and Kansas City Southern KSU recently reported first-quarter 2021 results.

Delta, carrying a Zacks Rank #4 (Sell), incurred a loss (excluding $1.70 from non-recurring items) of $3.55 per share, wider than the Zacks Consensus Estimate of a loss of $3.08. However, total revenues of $4,150 million topped the Zacks Consensus Estimate of $3,821.3 million.

J.B. Hunt, a Zacks #3 Ranked player, reported earnings of $1.37 per share, beating the Zacks Consensus Estimate of $1.18. Total operating revenues of $2,618.1 million also surpassed the Zacks Consensus Estimate of $2,486.9 million.

Kansas City Southern, carrying a Zacks Rank of 3, reported earnings (excluding 23 cents from non-recurring items) of $1.91 per share, missing the Zacks Consensus Estimate of $2. Moreover, quarterly revenues of $706 million lagged the Zacks Consensus Estimate of $714.3 million.

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Canadian National Railway Company (CNI) : Free Stock Analysis Report

Kansas City Southern (KSU) : Free Stock Analysis Report

Delta Air Lines, Inc. (DAL) : Free Stock Analysis Report

J.B. Hunt Transport Services, Inc. (JBHT) : Free Stock Analysis Report

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