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Canadian National (CNI) Shares Dip 2% on Q1 Earnings Miss
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Canadian National Railway Company’s (CNI - Free Report) first-quarter 2022 earnings (excluding a penny from non-recurring items) of $1.04 per share (C$1.32) missed the Zacks Consensus Estimate of $1.08. Results were hurt by supply chain disruptions and severe winter weather conditions. However, the bottom line improved 7.2% year over year. Following the earnings miss, shares of CNI declined 2.4% in after-market trading on Apr 26.
Quarterly revenues of $2,927.4 million (C$3,708 million) outperformed the Zacks Consensus Estimate of $2,898.6 million and increased 4.9% year over year, driven by strong freight demand, and higher fuel surcharge and freight rates.
Freight revenues (C$3,608 million), which contributed 97.3% to the top line, increased 5% year over year as economic activities gathered pace. Freight revenues at the Grain and fertilizers segment declined 15%, while the same at the Forest products unit dipped 1% year over year. Freight revenues at the Petroleum and Chemicals; Metals and minerals; Coal, Intermodal; and Automotive segments increased 14%, 10%, 55%, 9% and 4%, respectively.
Canadian National Railway Company Price, Consensus and EPS Surprise
While overall carloads (volumes) fell 6% year over year, revenue ton miles (RTMs) slipped 8%. Segment-wise, carloads in both Metals and mineral, and Automotive declined 6%. The same at Forest products, Grain and fertilizers and Intermodal decreased 9%, 18% and 13%, respectively. Carloads at the Petroleum and chemicals unit rose 6%, while the same at the Coal segment surged 71%. Freight revenues per carload climbed 12% year over year in the reported quarter, while freight revenues per RTM improved 15%.
Operating expenses (on a reported basis) ascended 12.4% to C$2,481 million. Due to high fuel prices, expenses on fuel climbed 44.2% year over year. Adjusted operating income increased 4% year over year to C$1,237 million. Adjusted operating ratio (defined as operating expenses as a percentage of revenues) deteriorated to 66.6% in the first quarter of 2022 from 66.3% in the fourth quarter of 2021. Lower the value of the metric, the better.
Liquidity
Canadian National, carrying a Zacks Rank #3 (Hold), generated free cash flow of C$571 million during the March quarter compared with the year-ago quarter’s C$539 million. Cash and cash equivalents amounted to C$490 million as of Mar 31, 2022 compared with C$838 million at December 2021 end.
Dividend Update
Canadian National’s board approved a quarterly dividend of C$0.7325 per share, payable to shareholders on Jun 30 of record as of Jun 9.
2022 Outlook
Canadian National expects adjusted earnings to increase 15-20% year over year in 2022 compared with the previous expectation of a rise of approximately 20%. The downside is due to challenging operating conditions, including supply chain woes and the prevalent pandemic. Operating ratio is estimated to be below 60% for 2022, compared with the previous view of around 57%. The company anticipates free cash flow in the band of C$3.7 billion-C$4.0 billion in the current year compared with approximately C$4 billion forecast earlier. For 2022, the company expects capital expenditures to be approximately 17% of revenues.
Sectorial Snapshot
Within the broader Transportation sector, Delta Air Lines (DAL - Free Report) and J.B. Hunt Transport Services (JBHT - Free Report) recently reported first-quarter 2022 results.
Delta, carrying a Zacks Rank #2 (Buy), incurred a loss (excluding 25 cents from non-recurring items) of $1.23 per share in the first quarter of 2022, narrower than the Zacks Consensus Estimate of a loss of $1.28. With Omicron hampering travel plans in the early part of first-quarter 2022, the carrier incurred a loss after reaping profits in the last two quarters of 2021. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Delta’s first-quarter revenues came in at $9,348 million, which not only beat the Zacks Consensus Estimate of $9,063.5 million but also soared in excess of 100% from the year-ago figure. The uptick in air-travel demand in the United States can be gauged from the fact that 80.5% of first-quarter 2022 passenger revenues came from domestic markets.
J.B. Hunt, carrying a Zacks Rank #2, reported first-quarter 2022 earnings of $2.29 per share, which surpassed the Zacks Consensus Estimate of $1.91. The bottom line surged 67.2% year over year on higher revenues across all segments.
J.B. Hunt’s first-quarter operating revenues of $3,488.6 million also outperformed the Zacks Consensus Estimate of $3,260.5 million. The top line jumped 33.3% year over year. Total operating revenues, excluding fuel surcharges, rose 27.4% year over year.
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Canadian National (CNI) Shares Dip 2% on Q1 Earnings Miss
Canadian National Railway Company’s (CNI - Free Report) first-quarter 2022 earnings (excluding a penny from non-recurring items) of $1.04 per share (C$1.32) missed the Zacks Consensus Estimate of $1.08. Results were hurt by supply chain disruptions and severe winter weather conditions. However, the bottom line improved 7.2% year over year. Following the earnings miss, shares of CNI declined 2.4% in after-market trading on Apr 26.
Quarterly revenues of $2,927.4 million (C$3,708 million) outperformed the Zacks Consensus Estimate of $2,898.6 million and increased 4.9% year over year, driven by strong freight demand, and higher fuel surcharge and freight rates.
Freight revenues (C$3,608 million), which contributed 97.3% to the top line, increased 5% year over year as economic activities gathered pace. Freight revenues at the Grain and fertilizers segment declined 15%, while the same at the Forest products unit dipped 1% year over year. Freight revenues at the Petroleum and Chemicals; Metals and minerals; Coal, Intermodal; and Automotive segments increased 14%, 10%, 55%, 9% and 4%, respectively.
Canadian National Railway Company Price, Consensus and EPS Surprise
Canadian National Railway Company price-consensus-eps-surprise-chart | Canadian National Railway Company Quote
While overall carloads (volumes) fell 6% year over year, revenue ton miles (RTMs) slipped 8%. Segment-wise, carloads in both Metals and mineral, and Automotive declined 6%. The same at Forest products, Grain and fertilizers and Intermodal decreased 9%, 18% and 13%, respectively. Carloads at the Petroleum and chemicals unit rose 6%, while the same at the Coal segment surged 71%. Freight revenues per carload climbed 12% year over year in the reported quarter, while freight revenues per RTM improved 15%.
Operating expenses (on a reported basis) ascended 12.4% to C$2,481 million. Due to high fuel prices, expenses on fuel climbed 44.2% year over year. Adjusted operating income increased 4% year over year to C$1,237 million. Adjusted operating ratio (defined as operating expenses as a percentage of revenues) deteriorated to 66.6% in the first quarter of 2022 from 66.3% in the fourth quarter of 2021. Lower the value of the metric, the better.
Liquidity
Canadian National, carrying a Zacks Rank #3 (Hold), generated free cash flow of C$571 million during the March quarter compared with the year-ago quarter’s C$539 million. Cash and cash equivalents amounted to C$490 million as of Mar 31, 2022 compared with C$838 million at December 2021 end.
Dividend Update
Canadian National’s board approved a quarterly dividend of C$0.7325 per share, payable to shareholders on Jun 30 of record as of Jun 9.
2022 Outlook
Canadian National expects adjusted earnings to increase 15-20% year over year in 2022 compared with the previous expectation of a rise of approximately 20%. The downside is due to challenging operating conditions, including supply chain woes and the prevalent pandemic. Operating ratio is estimated to be below 60% for 2022, compared with the previous view of around 57%. The company anticipates free cash flow in the band of C$3.7 billion-C$4.0 billion in the current year compared with approximately C$4 billion forecast earlier. For 2022, the company expects capital expenditures to be approximately 17% of revenues.
Sectorial Snapshot
Within the broader Transportation sector, Delta Air Lines (DAL - Free Report) and J.B. Hunt Transport Services (JBHT - Free Report) recently reported first-quarter 2022 results.
Delta, carrying a Zacks Rank #2 (Buy), incurred a loss (excluding 25 cents from non-recurring items) of $1.23 per share in the first quarter of 2022, narrower than the Zacks Consensus Estimate of a loss of $1.28. With Omicron hampering travel plans in the early part of first-quarter 2022, the carrier incurred a loss after reaping profits in the last two quarters of 2021. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Delta’s first-quarter revenues came in at $9,348 million, which not only beat the Zacks Consensus Estimate of $9,063.5 million but also soared in excess of 100% from the year-ago figure. The uptick in air-travel demand in the United States can be gauged from the fact that 80.5% of first-quarter 2022 passenger revenues came from domestic markets.
J.B. Hunt, carrying a Zacks Rank #2, reported first-quarter 2022 earnings of $2.29 per share, which surpassed the Zacks Consensus Estimate of $1.91. The bottom line surged 67.2% year over year on higher revenues across all segments.
J.B. Hunt’s first-quarter operating revenues of $3,488.6 million also outperformed the Zacks Consensus Estimate of $3,260.5 million. The top line jumped 33.3% year over year. Total operating revenues, excluding fuel surcharges, rose 27.4% year over year.