Canadian National At 52-Week High: What's Driving It?

Shares of Canadian National Railway Company (NYSE:CNI) hit a 52-week high of $82.65 during the course of the trading session on Jun 28, before retracing a bit to close the session at $82.55.

The company’s first-quarter 2017 coal revenues improved a massive 39% year over year. This seems to be the prime reason for the upside. The increase in revenues was witnessed across most segments. Overall, volumes rose 9%.

Efforts to reward shareholders through dividend payments and share buybacks are impressive as well. The latest hike was announced in Jan 2017, when the company’s board of directors had approved a generous 10% hike in its quarterly cash dividend to 41.25 cents per share (annualized C$1.65). The improved earnings per share guidance for full-year 2017 is also a positive.

The company’s announcement of $2.6 billion capital plan in Apr 2017 is also a huge positive. Of the total, C$1.6 billion will be invested in track infrastructure. The balance is expected to be spent on buying 22 high-horsepower locomotives and other growth oriented projects.

In Apr 2017, the company received good news on the labor front, when the International Brotherhood of Electrical Workers (IBEW) ratified a five-year collective labor deal. The union represents the signals and communications employees in Canada.

Owing to these tailwinds, shares of the company have outperformed the Zacks categorized Transportation - Rail industry in the last one year. The stock gained 39.77%, compared with the industry’s 37.55% rise.

A Broker Favorite

We note that earnings estimates for Canadian National have exhibited a healthy uptrend. Over the last 90 days, the Zacks Consensus Estimate of earnings for the current quarter has gone up 4.3% to 97 cents per share, on the back of multiple upward revisions. Likewise, the Zacks Consensus Estimate for full-year 2017 has increased 2.1% over the last three months to $3.83 per share.

Given the wealth of information at brokers’ disposal, it is in the best interests of the investors to be guided by brokers’ advice and their direction of estimate revisions which serve as important pointers to evaluate stock price.

Stocks to Consider

Canadian National currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the broader transportation sector are Alstom (PA:ALSO) ADR (OTC:ALSMY) , Kansas City Southern (NYSE:KSU) and Norfolk Southern Corporation (NYSE:NSC) . All hold a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of Alstom, Kansas City Southern and Norfolk Southern surged over 24%, 20% and 7%, respectively, in the last three months.

Today's Stocks from Zacks' Hottest Strategies

It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.

And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation. See Them Free>>