Canadian National Stock Falls 4.9% Since Q2 Earnings & Revenue Miss

Canadian National Railway Company CNI reported second-quarter 2025 results, wherein both earnings and revenues lagged the Zacks Consensus Estimate. The development, naturally, disappointed investors, with the stock declining 4.9% since the earnings release on July 22.

The earnings of $1.35 per share (C$1.87), which missed the Zacks Consensus Estimate of $1.37, remained flat on a year-over-year basis. Revenues for the second quarter of 2025 were $3.09 billion (C$4.3 billion), which missed the Zacks Consensus Estimate of $3.16 billion and declined 2.4% year over year.

Revenue ton-miles (RTMs or a measure of volumes) decreased 1% year over year. Carloads dropped 0.4% on a year-over-year basis. Freight revenue per RTM inched down 0.3% year over year.

Canadian National Railway Company Price, Consensus and EPS Surprise

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

Operating expenses for the second quarter of 2025 fell 5.2% from the year-ago figure. This was mainly due to prudent cost-cutting efforts.

The operating income for the second quarter of 2025 grew 4.9% from the second quarter of 2024 actuals. The operating ratio, defined as operating expenses as a percentage of revenues on an adjusted basis, improved 0.5 points to 61.7% in the second quarter of 2025.

CNI’s Q2 Segmental Highlights

Freight revenues, which contributed 95.7% to the top line, decreased 1.5% year over year. Freight revenues in petroleum and chemicals, metals and minerals, forest products, intermodal and automotive fell 5%,7%, 8%, 3% and 6%, year over year, respectively.

Revenues from grain and fertilizers rose 13% compared with 2024 figures. Revenues from the coal segment remained flat year over year.

Segment-wise, carloads in petroleum and chemicals, metals and minerals, forest products and automotive segments decreased 5%, 3%, 8% and 5%, respectively. The same in the grain and fertilizers, and intermodal segments rose 9% and 1% year over year. Carloads in the coal segment remained flat on a year-over-year basis.

CNI’s Liquidity

Canadian National ended the first quarter with cash and cash equivalents of C$216 million compared with C$389 million at the end of the fourth quarter of 2024. CNI exited the second quarter with a long-term debt of C$19.3 billion compared with C$19.7 billion at the end of the December-end quarter of 2024.

CNI generated C$1.75 billion of cash from operating activities. Free cash flow was C$922 million.

Under its current Normal Course Issuer Bid (“NCIB”), CNI may repurchase up to 20 million common shares between Feb. 4, 2025 and Feb. 3, 2026. As of March 31, 2025, CNI had repurchased 2.2 million common shares for $300 million under its current NCIB.

CNI repurchased 13.9 million common shares under its previous NCIB, including 0.6 million common shares in the first quarter of 2025, which allowed for the repurchase of up to 32 million common shares between Feb. 1, 2024 and Jan. 31, 2025.

CNI’s Outlook

For full-year 2025, CNI anticipates delivering a mid to high-single-digit range of adjusted earnings per share (EPS) growth compared to its previous guided range of 10%-15% and plans to invest approximately C$3.4 billion in its capital program, net of amounts reimbursed by customers.

In view of the revised 2025 guidance, and ongoing macroeconomic uncertainty and volatility stemming from shifting trade and tariff policies, CNI is withdrawing its financial outlook for the 2024-2026 period.

CNI’s Zacks Rank

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

Q2 Performances of Other Transportation Companies

Union Pacific Corporation’s UNP second-quarter 2025 earnings (excluding 12 cents from non-recurring items) of $3.03 per share beat the Zacks Consensus Estimate of $2.91. The bottom line improved 10.6% on a year-over-year basis. This year-over-year improvement was due to strong operational efficiency.

Operating revenues of $6.2 billion marginally beat the Zacks Consensus Estimate of $6.1 billion. The top line improved 2.5% on a year-over-year basis owing to higher volumes and solid core pricing gains.

United Airlines Holdings, Inc. UAL reported mixed second-quarter 2025 results, wherein the company’s earnings beat the Zacks Consensus Estimate, but revenues missed the same.

UAL's second-quarter 2025 adjusted earnings per share (excluding 90 cents from non-recurring items) of $3.87 surpassed the Zacks Consensus Estimate by a penny but declined 6.5% on a year-over-year basis. The reported figure lies within the guided range of $3.25-$4.25.

Operating revenues of $15.2 billion fell short of the Zacks Consensus Estimate of $15.4 billion but increased 1.7% year over year. 

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This article originally published on Zacks Investment Research (zacks.com).

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