Canadian National (CNI) Stock Down 2.2% Despite Q4 Earnings Beat
Canadian National Railway Company CNI reported solid fourth-quarter 2023 results, wherein both earnings and revenues beat the Zacks Consensus Estimate. However, the solid results failed to impress investors as CNI fell 2.2% since its earnings release.
Quarterly earnings per share (EPS) of $1.48 (C$3.29) (excluding 94 cents from non-recurring items) beat the Zacks Consensus Estimate of $1.46 but declined 4.5% year over year.
Quarterly revenues of $3,284.4 million (C$4,471 million) surpassed the Zacks Consensus Estimate of $3,247.3 million but fell 1.8% year over year. The decline was due to lower shipments of intermodal and grain, container storage fees and fuel surcharge revenues as a result of a dip in fuel prices.
Canadian National Railway Company Price, Consensus and EPS Surprise
Canadian National Railway Company price-consensus-eps-surprise-chart | Canadian National Railway Company Quote
Reduced demand for freight services hurt volumes. The metric was also hit by the Pacific-coast dock workers’ strike and unfavorable crude oil price spreads, among other factors. These were partly offset by freight rate increases, the favorable translation impact of a weaker Canadian dollar and higher export volumes of Canadian grain.
Freight revenues (C$4,303 million), which contributed 96.2% to the top line, decreased 2% year over year, less than our anticipated fall of 5.3%. Freight revenues from the Petroleum and chemicals, Metals and minerals, Coal, Grain and fertilizers and Automotive segments grew 8%, 1%, 6%, 4% and 19%, respectively. Revenues from the Forest products and Intermodal segments increased 6% and 20%, respectively.
Carloads revenues fell 1% year over year, lower than our projected dip of 2.4%. Segment-wise, carloads in Petroleum and chemicals, Metals and minerals and Automotive increased 8%, 2% and 13%, respectively. Forest products, Coal, Grain and fertilizers and Intermodal declined 6%, 1%, 3% and 6%, respectively.
Freight revenues per carload edged down 1% from the year-ago reported quarter, while freight revenues per revenue ton-miles were down 4%.
Operating expenses increased 1% year over year to C$2,653 million. The increase was mainly due to higher Labor and fringe benefits expense due to general wage increases, and higher average headcount and personal injury and legal claim provisions.
Adjusted operating ratio (defined as operating expenses as a percentage of revenues) was 59.3% in fourth-quarter 2023, up from 57.9% in the year-ago reported quarter. The lower the metric, the better.
Liquidity
Canadian National generated a free cash flow of C$1,613 million during the fourth quarter compared with C$1,335 million a year ago.
2024 Outlook
For 2024, Canadian National anticipates to deliver adjusted EPS growth of approximately 10%.
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.
Performances of Other Transportation Companies
J.B. Hunt Transport Services, Inc.’s JBHT fourth-quarter 2023 earnings of $1.47 per share missed the Zacks Consensus Estimate of $1.74 and declined 23.4% year over year.
JBHT’s total operating revenues of $3,303.70 million surpassed the Zacks Consensus Estimate of $3,236.2 million but fell 9.5% year over year. Total operating revenues, excluding fuel surcharge revenues, fell 6% year over year.
Delta Air Lines DAL reported fourth-quarter 2023 earnings (excluding $1.88 from non-recurring items) of $1.28 per share, which comfortably beat the Zacks Consensus Estimate of $1.17. Earnings, however, declined 13.51% on a year-over-year basis due to high labor costs.
Revenues of $14,223 million surpassed the Zacks Consensus Estimate of $14,069.5 million and increased 5.87% on a year-over-year basis, driven by strong demand for holiday air travel. Adjusted operating revenues (excluding third-party refinery sales) came in at $13,661 million, up 11% year over year.
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