A month has gone by since the last earnings report for Canadian National (CNI). Shares have lost about 2.6% in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is CN due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important drivers.
Earnings Miss at Canadian National in Q2
Canadian National Railway reported second-quarter 2025 results, wherein both earnings and revenues lagged the Zacks Consensus Estimate.
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.
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 second quarter with cash and cash equivalents of C$216 million compared with C$232 million at the end of prior quarter. CNI exited the second quarter with a long-term debt of C$19.3 billion compared with C$18.9 billion at the end of prior quarter.
CNI generated C$1.75 billion of cash from operating activities. Free cash flow was C$922 million.
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.
Under its current Normal Course Issuer Bid (“NCIB”), CNI may repurchase up to 20.0 million common shares between Feb 4, 2025 and Feb 3, 2026. As of June 30, 2025, CNI had repurchased 2.2 million common shares for $300 million under its current NCIB.
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.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
At this time, CN has a subpar Growth Score of D, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock has a score of C on the value side, putting it in the middle 20% for value investors.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, CN has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Canadian National Railway Company (CNI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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