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Canadian National (CNI) Stock Up 3.4% Since Q3 Earnings Beat

Canadian National Railway Company CNI stock has gained 3.4% since its third-quarter 2022 earnings release on Oct 25. The uptick can be attributed to better-than-expected earnings and revenue performance.

Quarterly earnings of $1.63 per share (C$2.13) outpaced the Zacks Consensus Estimate of $1.51 and improved 34.7% year over year.

Quarterly revenues of $3,459.8 million (C$4,513 million) outperformed the Zacks Consensus Estimate of $3,214.2 million and increased 21.3% year over year. The uptick was driven by higher fuel surcharge revenues backed by higher fuel prices, freight rate increases, higher Canadian export volumes of coal via west coast ports, higher volumes of U.S. grain and the positive translation impact of a weaker Canadian dollar.

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

Freight revenues (C$4,366 million), which contributed 96.7% to the top line, increased 27% year over year. Freight revenues at the Petroleum and Chemicals; Metals and minerals; Forest products; Coal; Grain and fertilizers; Intermodal; and Automotive segments increased 19%, 31%, 29%, 53%, 22%, 26% and 52%, respectively.

Carloads revenue ton-miles (RTMs) grew 5%. Segment-wise, carloads in Petroleum and chemicals; Forest products; Coal; Grain and fertilizers and Automotive grew 7%, 5%, 19%, 3% and 30%, respectively. The same at Metals and minerals; and Intermodal decreased by 1% each, respectively. Freight revenues per carload climbed 24% year over year in the reported quarter, while freight revenues per RTM improved 22%.

Operating expenses (on a reported basis) ascended 15% to C$2,581 million. Adjusted operating income increased 31.3% year over year to C$1,932 million. The adjusted operating ratio (defined as operating expenses as a percentage of revenues) deteriorated to 57.2% in the third quarter of 2022 from 59% in the third quarter of 2021.

Liquidity

Canadian National generated a free cash flow of C$1,356 million during the third quarter compared with the year-ago quarter’s C$754 million.

2022 Outlook

Canadian National raised its full-year 2022 guidance. The company now expects adjusted earnings to register nearly 25% growth (prior view: 15-20% growth) in 2022. The company now anticipates a free cash flow of nearly C$4.2 billion (prior view: C$3.7 billion-C$4.0 billion) in the current year.

The operating ratio is still estimated to be below 60% for 2022.

Currently, Canadian National carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Transportation Companies

Delta AirLines’ DAL third-quarter 2022 earnings (excluding 42 cents from non-recurring items) of $1.51 per share fell short of the Zacks Consensus Estimate of $1.56. Escalated operating expenses induced the earnings miss.  Multiple flight cancelations and booking weaknesses due to Hurricane Ian also hurt results. DAL reported earnings of 30 cents per share a year ago, dull in comparison to the current scenario, as air-travel demand was not so buoyant then.

DAL reported revenues of $13,975 million, which lagged the Zacks Consensus Estimate of $14,157.2 million. Driven by the high air-travel demand, total revenues increased more than 52% on a year-over-year basis.

United Airlines’ UAL third-quarter 2022 earnings (excluding 5 cents from non-recurring items) of $2.81 per share beat the Zacks Consensus Estimate of $2.21 and our estimate of $2.17. An upbeat in air-travel demand aided results. In the year-ago quarter, UAL incurred a loss of $1.02 per share when air-travel demand was not as buoyant as in the current scenario. The third quarter of 2022 was the second consecutive profitable quarter at UAL since the onset of the pandemic.

Operating revenues of $12,877 million beat the Zacks Consensus Estimate of $12,709.5 million and our estimate of $12, 631.6 million. UAL’s revenues increased more than 66% year over year owing to an upbeat in air-travel demand. The optimistic air-travel demand scenario is also evident from the fact that total operating revenues increased 13.2% from third-quarter 2019 (pre-coronavirus) levels.

J.B. Hunt Transport Services, Inc. JBHT reported better-than-expected third-quarter 2022 results, wherein both earnings and revenues outperformed the Zacks Consensus Estimate.JBHT’s quarterly earnings of $2.57 per share surpassed the Zacks Consensus Estimate of $2.45 and improved 36.7% year over year.

JBHT’s operating revenues of $3,838.3 million also outperformed the Zacks Consensus Estimate of $3803.4 million. The top line jumped 22.1% year over year on the back of strength across — Dedicated Contract Services, Intermodal, Truckload and Final Mile Services segments. Total operating revenues, excluding fuel surcharges, rose 12.4% year over year.


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