Canadian National (CNI) Q2 Earnings In Line, Revenues Beat
Canadian National Railway Company’s CNI second-quarter 2017 earnings per share (on an adjusted basis) of $1.00 (C$1.34) were in line with the Zacks Consensus Estimate. Adjusted earnings climbed 16.28% from the year-ago figure.
Quarterly revenues of $2474.1 million (C$3,329) surpassed the Zacks Consensus Estimate of $2440.1 million and climbed 12.20% year over year. Rail freight revenues, accounting for bulk of the top line in the quarter, improved 18%. The top line got a boost from increased volumes in segments namely, Canadian Grain and Fertilizers, Overseas Intermodal Traffic, Frac Sand, Coal and Petroleum Coke exports, Crude oil and Finished vehicles.
Operating Results
On a year-over-year basis, freight revenues increased in all the segments, 12% at Petroleum and chemicals, 33% at Metals and minerals and Coal, 6% at Forest products, 23% at Grain and fertilizers, 17% at Intermodal and 20% at Automotive. Overall, carloads (volumes) also expanded 14% and revenue ton miles (RTMs) rallied 18% year over year. Rail freight revenues per carload inched up 3% in the reported quarter.
The Metals and minerals sub group performed most impressively with respect to car loads that surged 32%. The other two segments to report double-digit volume growth is Grain and fertilizers, and Intermodal, both showing a 16% increase. However, Coal and Forest products volumes decreased 3% and 2% respectively.
In the quarter under review, operating income climbed 16% year over year to C$1,495 million. Operating ratio (defined as operating expenses as a percentage of revenues) was 55.1% compared with 54.5% in the year-ago quarter. Higher fuel costs contributed to the deterioration in this key metric.
Canadian National Railway Company Price, Consensus and EPS Surprise
Canadian National Railway Company Price, Consensus and EPS Surprise | Canadian National Railway Company Quote
Liquidity
Canadian National exited the second quarter with free cash flow of C$811 million compared with C$585 million a year ago. Adjusted debt at the end of the quarter was C$11,045 million compared with C$10,883 million a year ago.
Dividend
This Zacks Rank #2 (Buy) company’s board of directors approved a cash dividend of C$0.4125 per share for the third quarter. The dividend amount will be paid on Sep 29 to shareholders of record as of Sep 8. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Guidance
Canadian National continues to expect full-year 2017 earnings per share in the band of C$4.95-C$5.10 compared with C$4.59 a year ago.
Upcoming Releases
Investors interested in the broader transportation space are keenly waiting for second-quarter earnings reports from key players like American Airlines Group, Inc. AAL, Copa Holdings, S.A. CPA and Air Lease Corporation AL. While American Airlines is scheduled to report its second-quarter results on Jul 28, Copa Holdings and Air Lease will report the same on Aug 9 and Aug 3 respectively.
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