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Solid Liquidity Ups Canadian National (CNI) Despite Rising Costs
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Canadian National Railway Company (CNI - Free Report) has an impressive Growth Score of B. This style score condenses all the essential metrics from CNI’s financial statements to get a true sense of quality and sustainability of growth.
We are impressed by Canadian National's efforts to reward its shareholders. To this end, CNI's board approved a dividend hike of 19% in January 2022. The new dividend of C$0.7325 cents per share will be paid out on Mar 31, 2022 to the shareholders of record as of Mar 10. This marks CNI’s 26th annual dividend increase.
Canadian National also announced a normal course issuer bid in the range of C$5 billion for cancellation, over a 12-month period up to 42 million common shares. The bid will run from Feb 1, 2022 through Jan 31, 2023. Despite the ongoing turbulence, its decision to hike its dividend payment is encouraging. Its ability to generate free cash flow supports shareholder-friendly activities. In 2021, CNI generated free cash flow to the tune of C$3.3 billion. Management expects to generate free cash flow of approximately C$4 billion in 2022.
Canadian National’s liquidity position is impressive. The railroad operator's current ratio (a measure of liquidity) at the end of fourth-quarter 2021 was 1.10 compared with 0.95 reported in fourth-quarter 2020. Total debt to total capital ratio was 0.35 at the end of December-quarter 2021, lower than the previous year’s 0.40. Lower debt-to-capitalization ratio indicates that the proportion of debt to finance CNI’s assets is declining and so is the risk of insolvency.
Increase in fuel price is escalating expenses. This, is in turn, is hurting the bottom line. Consequently, fuel expenses increased 43% year over year in the fourth quarter with price rising 62%. With oil price moving north, fuel expenses are likely to be high in first-quarter 2022 as well.
Zacks Rank & Stocks to Consider
Canadian National currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader Zacks Transportation sector are Expeditors International of Washington, Inc. (EXPD - Free Report) , Old Dominion Freight Line, Inc. (ODFL - Free Report) and Triton International Limited .
Expeditors delivers a surprise of 34.2%, with its earnings surpassing the Zacks Consensus Estimate in all the last four quarters. EXPD is being aided by the uptick in airfreight revenues. We are optimistic about its buyout of Fleet Logistics’ Digital Platform. The acquisition boosted EXPD’s online LTL shipping platform Koho. The move is in line with EXPD's focus on Digital Solutions.
The long-term expected EPS (three to five years) growth rate for Old Dominion is pegged at 16%. ODFL is benefiting from the strong performance of its LTL segment owing to improved freight conditions. In 2021, revenues from the LTL services segment increased 30.7% on a year-over-year basis.
Driven by the tailwinds, the stock has increased 33.4% in the past year. ODFL currently carries a Zacks Rank #2 (Buy).
The long-term expected EPS (three to five years) growth rate for Triton is pegged at 10%. Gradual expansions in trade volumes and container demand bode well for TRTN. With easing coronavirus-led restrictions in the United States and Europe, TRTN saw a strong rebound in its business in the third and the fourth quarters of 2020 as well as in each of the four quarters of 2021.
Driven by the tailwinds, the stock has increased 28.2% in the past year. TRTN currently carries a Zacks Rank of 2.
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Solid Liquidity Ups Canadian National (CNI) Despite Rising Costs
Canadian National Railway Company (CNI - Free Report) has an impressive Growth Score of B. This style score condenses all the essential metrics from CNI’s financial statements to get a true sense of quality and sustainability of growth.
We are impressed by Canadian National's efforts to reward its shareholders. To this end, CNI's board approved a dividend hike of 19% in January 2022. The new dividend of C$0.7325 cents per share will be paid out on Mar 31, 2022 to the shareholders of record as of Mar 10. This marks CNI’s 26th annual dividend increase.
Canadian National also announced a normal course issuer bid in the range of C$5 billion for cancellation, over a 12-month period up to 42 million common shares. The bid will run from Feb 1, 2022 through Jan 31, 2023. Despite the ongoing turbulence, its decision to hike its dividend payment is encouraging. Its ability to generate free cash flow supports shareholder-friendly activities. In 2021, CNI generated free cash flow to the tune of C$3.3 billion. Management expects to generate free cash flow of approximately C$4 billion in 2022.
Canadian National’s liquidity position is impressive. The railroad operator's current ratio (a measure of liquidity) at the end of fourth-quarter 2021 was 1.10 compared with 0.95 reported in fourth-quarter 2020. Total debt to total capital ratio was 0.35 at the end of December-quarter 2021, lower than the previous year’s 0.40. Lower debt-to-capitalization ratio indicates that the proportion of debt to finance CNI’s assets is declining and so is the risk of insolvency.
Increase in fuel price is escalating expenses. This, is in turn, is hurting the bottom line. Consequently, fuel expenses increased 43% year over year in the fourth quarter with price rising 62%. With oil price moving north, fuel expenses are likely to be high in first-quarter 2022 as well.
Zacks Rank & Stocks to Consider
Canadian National currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader Zacks Transportation sector are Expeditors International of Washington, Inc. (EXPD - Free Report) , Old Dominion Freight Line, Inc. (ODFL - Free Report) and Triton International Limited .
Expeditors delivers a surprise of 34.2%, with its earnings surpassing the Zacks Consensus Estimate in all the last four quarters. EXPD is being aided by the uptick in airfreight revenues. We are optimistic about its buyout of Fleet Logistics’ Digital Platform. The acquisition boosted EXPD’s online LTL shipping platform Koho. The move is in line with EXPD's focus on Digital Solutions.
EXPD currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The long-term expected EPS (three to five years) growth rate for Old Dominion is pegged at 16%. ODFL is benefiting from the strong performance of its LTL segment owing to improved freight conditions. In 2021, revenues from the LTL services segment increased 30.7% on a year-over-year basis.
Driven by the tailwinds, the stock has increased 33.4% in the past year. ODFL currently carries a Zacks Rank #2 (Buy).
The long-term expected EPS (three to five years) growth rate for Triton is pegged at 10%. Gradual expansions in trade volumes and container demand bode well for TRTN. With easing coronavirus-led restrictions in the United States and Europe, TRTN saw a strong rebound in its business in the third and the fourth quarters of 2020 as well as in each of the four quarters of 2021.
Driven by the tailwinds, the stock has increased 28.2% in the past year. TRTN currently carries a Zacks Rank of 2.