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Canadian National Railway Company (CNI - Analyst Report) – the largest rail network in Canada – is set to release its second-quarter 2013 results before the opening bell on Jul 22, 2013.

In the last quarter, the company delivered a 1.67% negative earnings surprise. Let’s see how things are shaping up for this announcement.

Factors to be Considered this Quarter

Despite the economic slowdown, we expect Canadian National Railway to benefit from strong growth of favorable demand/supply dynamics. The company has also planned investments for infrastructural development along with dividend payouts and share buybacks. However, weakness in some of the product lines along with estimated high expenses indicate that the company will perform at par with the broader market and keep us sidelined.

Earnings Whispers

Our proven model does not conclusively show that Canadian National Railway is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Expected Surprise Prediction (ESP) (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below.

Negative Zacks ESP: This is because the Most Accurate Estimate is $1.57 while the Zacks Consensus Estimate is higher at $1.58. This leads to an ESP of -0.63% for Canadian National Railway.

Zacks Rank #3 (Hold): Canadian National Railway’s Zacks Rank #3, decreases the predictive power of ESP.

We caution investors against the stock going into the earnings announcement, as a Zacks Earnings ESP of -0.63% combined with a Zacks Rank # 3 lowers the possibility of an earnings surprise.

Other Stocks to Consider

Here are some other companies to consider as our model shows they have the right combination of elements to post an earnings beat this quarter.

Westinghouse Air Brake Technologies Corporation (WAB - Snapshot Report) has an Earnings ESP of +2.74% and carries a Zacks Rank #2 (Buy).

Celadon Group Inc. (CGI - Snapshot Report) has an Earnings ESP of +3.33% and carries a Zacks Rank #2 (Buy).

Expeditors International of Washington Inc. (EXPD - Analyst Report) has an Earnings ESP of +2.33% and carries a Zacks Rank #3 (Hold).

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