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TheStreet Open House

Why Canadian National Railway (CNI) Stock Is Higher Today

NEW YORK (TheStreet) -- Shares of Canadian National Railway Co.  (CNI) are up 2.04% to $69.37 after the Montreal-based transportation firm reported a significant increase in profit and bolstered its 2014 financial outlook, reflecting a quick recovery from last quarter's tough winter weather, Reuters reports.

CN said net earnings for the quarter ended June 30 rose to C$847-million ($789.6-million), or C$1.03 per share, from C$717-million, or 84 Canadian cents per share, in the same period a year ago.

Excluding one-time gains, adjusted earnings per share were C$1.03, compared with 83 Canadian cents in the year-ago quarter.

Must Read: Warren Buffett's 25 Favorite Growth Stocks

 

Revenue increased 17% to C$3.11-billion, as carload volumes grew 11%. Analysts, on average, were expecting earnings of C$1.00 a share and revenue of C$3.10-billion, according to Thomson Reuters I/B/E/S.

CN said it now expects to deliver "solid double-digit EPS growth" in 2014 over 2013 earnings per share of C$3.06, versus an earlier forecast of "aiming for double-digit" growth.

TheStreet Ratings team rates CANADIAN NATIONAL RAILWAY CO as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate CANADIAN NATIONAL RAILWAY CO (CNI) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, good cash flow from operations, growth in earnings per share and increase in net income. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • CNI's revenue growth has slightly outpaced the industry average of 7.9%. Since the same quarter one year prior, revenues slightly increased by 9.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 31.71% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, CNI should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Net operating cash flow has significantly increased by 100.93% to $645.00 million when compared to the same quarter last year. In addition, CANADIAN NATIONAL RAILWAY CO has also vastly surpassed the industry average cash flow growth rate of 20.41%.
  • CANADIAN NATIONAL RAILWAY CO has improved earnings per share by 15.4% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. During the past fiscal year, CANADIAN NATIONAL RAILWAY CO increased its bottom line by earning $3.09 versus $3.06 in the prior year.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Road & Rail industry average. The net income increased by 12.3% when compared to the same quarter one year prior, going from $555.00 million to $623.00 million.
  • You can view the full analysis from the report here: CNI Ratings Report

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