Canadian National Railway Company’s CNI third-quarter 2020 earnings of $1.04 per share (C$1.38) missed the Zacks Consensus Estimate by 5 cents. Moreover, the bottom line declined 17.5% year over year.
Quarterly revenues of $2,558.6 million (C$3,409 million) missed the Zacks Consensus Estimate of $2,661 million and declined 11.8% year over year. The downside was primarily caused by COVID-19-induced lower volumes across most commodity groups and lower fuel surcharge rates.
Lackluster freight demand also had a negative impact on the top line. Freight revenues (C$3,249), which contributed 95.3% to the top line, fell 10% year over year. On a year-over-year basis, freight revenues declined across all segments. Freight revenues in Petroleum and Chemicals, Metals and Minerals, Forest Products and Coal segment declined 25%, 20%, 6% and 30%, respectively. Moreover, the same also declined in the Automotive (18%) and Intermodal segment (3%). Nevertheless, revenues in the Grain and Fertilizers segment inched up 10%.
While overall carloads declined 6% year over year, revenue ton miles (RTMs) dropped 7%. Segment-wise, carloads declined in the Petroleum and Chemicals, Metals and Minerals, Forest Products, Coal by 22%, 13%, 10%, and 21%, respectively. Nevertheless, carloads in the Grain and Fertilizers segment moved up 12%. While the metric fell 13% in the Automotive segment, the same remained flat in Intermodal segment. Moreover, freight revenue per carload dropped 5% in the reported quarter. Freight revenue per RTM also fell 3%.
Operating expenses for the third quarter decreased 8% to C$2,043 million, due to lower fuel and labor costs, as well as decreased purchased services and material expense. Adjusted operating income declined 15% year over year to C$1,366 million. Adjusted operating ratio (defined as operating expenses as a percentage of revenues) deteriorated to 59.9% from the year-ago quarter’s figure of 57.9%. Notably, a smaller value of the metric is desirable.
This Zacks Rank #3 (Hold) company exited the September-end quarter with cash and cash equivalents of C$285 million compared with the C$64 million recorded at the end of 2019. The company generated free cash flow of C$506 during the third quarter of 2020 compared with the year-ago quarter’s C$700 million. Long-term debt amounted to C$12,915 million as of Sep 30, 2020 compared with C$11,866 million at 2019-end.
Canadian National Railway Company Price, Consensus and EPS Surprise
Canadian National Railway Company price-consensus-eps-surprise-chart | Canadian National Railway Company Quote
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The company's board maintains its quarterly dividend of C$0.575 per share, which will be paid out on Dec 30 to shareholders of record at the close of business on Dec 9.
Apart from Canadian National, let’s take a look into some other Zacks Transportation sector’s third-quarter earnings like Delta Air Lines DAL , J.B. Hunt Transport Services JBHT and United Airlines Holdings, Inc. UAL.
Delta incurred a loss (excluding $5.17 from non-recurring items) of $3.30 per share in the September quarter, wider than the Zacks Consensus Estimate of a loss of $3.14. Meanwhile, Delta reported earnings of $2.32 per share (on an adjusted basis) in the year-ago quarter, driven by high passenger revenues as air-travel demand was buoyant at that time.
J.B. Hunt reported mixed third-quarter 2020 results, with earnings missing estimates while revenues beating the same. Quarterly earnings of $1.18 per share fell short of the Zacks Consensus Estimate of $1.26. Moreover, the bottom line declined 15.7% year over year due to disappointing performance of its intermodal (JBI) unit. Total operating revenues increased 4.6% to $2,472.5 million. Revenues also beat the consensus mark of $2,345.2 million.
United Airlines incurred a loss (excluding $1.83 from non-recurring items) of $8.16 per share, comparing unfavorably with the Zacks Consensus Estimate of a loss of $7.63. Results were hurt by the coronavirus-induced weakness in air-travel demand. Moreover, operating revenues of $2,489 million slumped 78.1% year over year and also lagged the Zacks Consensus Estimate of $2,570.1 million. This year-over-year plunge was due to 84.3% drop in passenger revenues to $1,649 million.
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Canadian National Railway Company (CNI) : Free Stock Analysis Report
Delta Air Lines, Inc. (DAL) : Free Stock Analysis Report
United Airlines Holdings Inc (UAL) : Free Stock Analysis Report
J.B. Hunt Transport Services, Inc. (JBHT) : Free Stock Analysis Report
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