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Canadian National (CNI) Up 3.1% Since Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Canadian National Railway Company (CNI - Free Report) . Shares have added about 3.1% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Fourth quarter earnings
Canadian National Railway's fourth-quarter 2016 earnings (on an adjusted basis) of $0.93 per share edged past the Zacks Consensus Estimate of by a penny. Adjusted earnings climbed 5.7% from the year-ago figure. The company’s bottom line benefited from better expense management.
Quarterly revenues of $2,400.7 million (C$3,217 million) fell short of the Zacks Consensus Estimate of $2,455.9 million, but climbed over 1% on a year-over-year basis. Rail freight revenues, which accounted for bulk of the top line in the quarter, improved 1%.
Operating Results
On a year-over-year basis, freight revenues decreased 6% at the Coal segment, 5% at Petroleum and Chemicals, and 6% at Metals and Minerals. While Intermodal freight revenues climbed 1%, freight revenues for Grain and Fertilizers, and Automotive increased 14% and 4%, respectively. Freight revenues were flat at the Forest Products unit. Carloads (volumes) improved 3% and revenue ton miles (RTMs) climbed 4% year over year.
In the quarter under review, operating income climbed 3% year over year to C$1,395 million. Operating ratio (defined as operating expenses as a percentage of revenues) was 56.6% as against 57.2% in the year-ago quarter.
Liquidity
Canadian National exited 2016 with free cash flow of C$2,520 million compared with C$2,373 million in 2015. Adjusted debt at the end of 2016 was C$11,470 million compared with C$11,034 million a year ago.
Guidance
Canadian National expects earnings per share in 2017 to grow in the mid-single-digit range over adjusted EPS of C$4.59 recorded in 2016.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend for fresh estimate. There have been two revisions higher for the current quarter.
Canadian National Railway Company Price and Consensus
At this time, Canadian National's stock has an subpar Growth Score of 'D', while it is doing a bit better on the momentum front with 'C'. Following the exact same course, the stock was allocated also a grade of 'C' on the value side, putting it in the middle 20% for this investment strategy.
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.
Based on our scores, the stock is equally suitable for value and momentum investors.
Outlook
Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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Canadian National (CNI) Up 3.1% Since Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Canadian National Railway Company (CNI - Free Report) . Shares have added about 3.1% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Fourth quarter earnings
Canadian National Railway's fourth-quarter 2016 earnings (on an adjusted basis) of $0.93 per share edged past the Zacks Consensus Estimate of by a penny. Adjusted earnings climbed 5.7% from the year-ago figure. The company’s bottom line benefited from better expense management.
Quarterly revenues of $2,400.7 million (C$3,217 million) fell short of the Zacks Consensus Estimate of $2,455.9 million, but climbed over 1% on a year-over-year basis. Rail freight revenues, which accounted for bulk of the top line in the quarter, improved 1%.
Operating Results
On a year-over-year basis, freight revenues decreased 6% at the Coal segment, 5% at Petroleum and Chemicals, and 6% at Metals and Minerals. While Intermodal freight revenues climbed 1%, freight revenues for Grain and Fertilizers, and Automotive increased 14% and 4%, respectively. Freight revenues were flat at the Forest Products unit. Carloads (volumes) improved 3% and revenue ton miles (RTMs) climbed 4% year over year.
In the quarter under review, operating income climbed 3% year over year to C$1,395 million. Operating ratio (defined as operating expenses as a percentage of revenues) was 56.6% as against 57.2% in the year-ago quarter.
Liquidity
Canadian National exited 2016 with free cash flow of C$2,520 million compared with C$2,373 million in 2015. Adjusted debt at the end of 2016 was C$11,470 million compared with C$11,034 million a year ago.
Guidance
Canadian National expects earnings per share in 2017 to grow in the mid-single-digit range over adjusted EPS of C$4.59 recorded in 2016.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend for fresh estimate. There have been two revisions higher for the current quarter.
Canadian National Railway Company Price and Consensus
Canadian National Railway Company Price and Consensus | Canadian National Railway Company Quote
VGM Scores
At this time, Canadian National's stock has an subpar Growth Score of 'D', while it is doing a bit better on the momentum front with 'C'. Following the exact same course, the stock was allocated also a grade of 'C' on the value side, putting it in the middle 20% for this investment strategy.
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.
Based on our scores, the stock is equally suitable for value and momentum investors.
Outlook
Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.