On Wednesday, Susquehanna made an adjustment to the stock price target for Canadian National Railway (TSX:CNR) (NYSE:CNI), bringing it down to $125 from the previous $130, while maintaining a Neutral stance on the stock. The decision follows the company's commitment to its recently revised full-year earnings per share (EPS) guidance.
Canadian National Railway reported third-quarter 2024 earnings of C$1.72 per share, which was marginally higher than Susquehanna's estimate of C$1.71 and the consensus estimate by C$0.02. Despite this, the firm noted a slight operational shortfall compared to their expectations.
The analyst from Susquehanna highlighted that while Canadian National Railway is sticking to its adjusted full-year EPS targets, investors seem to have a somewhat lower threshold due to perceived risks in merchandise and macroeconomic factors.
The firm suggests maintaining a Neutral rating but is watching for potential entry points as the railway company becomes a lower-expectation investment with management focusing on cost control measures.
The report further commented on the company's performance, stating that the slight outperformance in EPS might not significantly shift investor sentiment. The emphasis remains on the company's strategic moves to manage costs in a challenging economic environment.
Canadian National Railway's stock performance and future outlook will continue to be monitored by investors, especially in light of the company's efforts to navigate through potential macroeconomic headwinds and its commitment to cost management.
In other recent news, Canadian National Railway has reported its third-quarter results, outperforming analyst expectations. The company disclosed adjusted earnings per share of C$1.72, exceeding the consensus estimate of C$1.70. Revenue was reported at C$4.11 billion, surpassing analyst projections of C$4.08 billion.
In addition, key industry metric, revenue ton miles, saw a 2% year-over-year increase to 56,548 million, and total freight revenues rose 3% to C$3.92 billion compared to the same period last year. In response to the recent challenges posed by wildfires and prolonged labor issues, Tracy Robinson, President and CEO of CN, stated the company's operations recovered quickly.
For the full year 2024, CN reiterated its guidance for adjusted earnings per share growth in the low single-digit range and maintained its capital expenditure forecast of approximately C$3.5 billion. Looking ahead, CN continues to target compound annual adjusted earnings per share growth in the high single-digit range over the 2024-2026 period.
InvestingPro Insights
Canadian National Railway's financial metrics and market position offer additional context to Susquehanna's analysis. According to InvestingPro data, the company boasts a market capitalization of $70.69 billion USD, reflecting its significant presence in the Ground Transportation industry. The company's P/E ratio of 18.25 suggests a relatively moderate valuation compared to its earnings, which aligns with Susquehanna's Neutral stance.
InvestingPro Tips highlight CNI's impressive track record of dividend payments, having raised its dividend for 29 consecutive years. This consistency in shareholder returns could be particularly attractive to investors in the current economic climate. Moreover, the company's gross profit margin of 55.34% for the last twelve months ending Q2 2024 underscores its operational efficiency, which may support its cost control efforts mentioned in the article.
It is worth noting that CNI's revenue growth has been modest, with a 6.7% increase in the most recent quarter (Q2 2024), while showing a slight decline of 2.23% over the last twelve months. This data provides context to the analyst's comments on potential risks in merchandise and macroeconomic factors.
For investors seeking a more comprehensive analysis, InvestingPro offers 13 additional tips on Canadian National Railway, providing a deeper dive into the company's financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.