We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Here's Why Investors Should Hold Canadian National (CNI) Now
Read MoreHide Full Article
Canadian National Railway Company (CNI - Free Report) is benefiting from investor-friendly steps and solid liquidity.
Factors Favoring CNI
We are impressed by CNI's efforts to reward its shareholders. To this end, the company's board approved a dividend hike of 8% in January. This marks its 27th annual dividend increase.
Despite the ongoing turbulence, its decision to hike dividend payment is encouraging. Canadian National’s ability to generate free cash flow supports shareholder-friendly activities. In 2022, it generated free cash flow to the tune of C$4,259 million compared with C$3,296 million in 2021. In the second quarter of 2023, CNI generated free cash flow of C$1,100 million compared with the year-ago quarter’s C$997 million.
Canadian National’s liquidity position is impressive. Its current ratio at second-quarter 2023 end was 0.93, higher than 0.74 reported in the first quarter of 2023. A rising current ratio implies that the company has enough liquid assets to cover its short-term liabilities.
Key Risks
Freight revenues (C$3,894 million), which contributed 95.9% to the top line, decreased 7% year over year in the second quarter of 2023. Freight revenues at the Petroleum and Chemicals, Forest products, and Intermodal segments tumbled 10%, 6%, and 26%, respectively. We predicted the metric to decline 7.2% year over year.
Image: Bigstock
Here's Why Investors Should Hold Canadian National (CNI) Now
Canadian National Railway Company (CNI - Free Report) is benefiting from investor-friendly steps and solid liquidity.
Factors Favoring CNI
We are impressed by CNI's efforts to reward its shareholders. To this end, the company's board approved a dividend hike of 8% in January. This marks its 27th annual dividend increase.
Despite the ongoing turbulence, its decision to hike dividend payment is encouraging. Canadian National’s ability to generate free cash flow supports shareholder-friendly activities. In 2022, it generated free cash flow to the tune of C$4,259 million compared with C$3,296 million in 2021. In the second quarter of 2023, CNI generated free cash flow of C$1,100 million compared with the year-ago quarter’s C$997 million.
Canadian National’s liquidity position is impressive. Its current ratio at second-quarter 2023 end was 0.93, higher than 0.74 reported in the first quarter of 2023. A rising current ratio implies that the company has enough liquid assets to cover its short-term liabilities.
Key Risks
Freight revenues (C$3,894 million), which contributed 95.9% to the top line, decreased 7% year over year in the second quarter of 2023. Freight revenues at the Petroleum and Chemicals, Forest products, and Intermodal segments tumbled 10%, 6%, and 26%, respectively. We predicted the metric to decline 7.2% year over year.
Zacks Rank & Key Picks
CNI currently carries Zacks Rank #3 (Hold).
Some better-ranked stocks for investors interested in the Zacks Transportation sector are GATX Corporation (GATX - Free Report) and Kirby Corporation (KEX - Free Report) .
GATX, which presently carries a Zacks Rank #2 (Buy), is aided by gradual improvement in the North American railcar leasing market. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
For third-quarter and full-year 2023, GATX’s earnings are estimated to register 36.6% and 14.3% climb, respectively, on a year-over-year basis.
Kirby currently carries a Zacks Rank #2. Strong segmental performances are boosting Kirby’s top line.
For third-quarter and full-year 2023, KEX’s earnings are suggested to record 58.5% and 76.2% improvement, respectively, on a year-over-year basis.