What's in Store for Canadian National (CNI) Q2 Earnings?

Canadian National Railway Company CNI is scheduled to report second-quarter 2020 results on Jul 21, after market close.

The Zacks Consensus Estimate for the company’s second-quarter earnings has been revised 1.1% upward to 91 cents per share over the past 60 days. Moreover, it has an impressive earnings history, having outperformed the Zacks Consensus Estimate in each of the preceding four quarters, the average being 7.5%.

Let’s see whether the company is able to sustain its beat streak in the June quarter as well.

Factors Likely at Play

Canadian National’s overall performance in the second quarter is likely to have improved owing to low fuel costs. This, in turn, might have improved the operating ratio (operating expenses as a percentage of revenues) and aided the bottom line too. Notably, a lower value of this key metric is desirable.

Also, Canadian National set a record by moving 8.15 million metric tonnes (MMT) of Canadian grain during second-quarter 2020. With this, the company also broke its previous record of transporting 8.08MMT Canadian grains. The record grain movement in the second quarter is expected to have bolstered its top line.

Canadian National Railway Company Price and EPS Surprise

Canadian National Railway Company price-eps-surprise | Canadian National Railway Company Quote

Nevertheless, Canadian National’s overall performance is likely to have been affected by COVID-19-induced network disruptions. Due to declining shipments, overall volumes are expected to have taken a hit in the quarter to be reported. Also, revenue ton miles (RTMs) might have been hurt by low freight revenues.

What Does the Zacks Model Say?

Our proven Zacks model predicts an earnings beat for Canadian National this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of a positive surprise as elaborated below. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: Canadian National has an Earnings ESP of +3.70% as the Most Accurate Estimate is pegged at 95 cents per share, higher than the Zacks Consensus Estimate of 91 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Canadian National carries a Zacks Rank #2 (Buy), currently.

Highlights of Q1 Earnings

Canadian National's first-quarter 2020 earnings (excluding 15 cents from non-recurring items) of 91 cents per share (C$1.42) beat the Zacks Consensus Estimate by 15 cents. The bottom line also increased 3.4% year over year. Although quarterly revenues of $2,643.3 million (C$3,545 million) surpassed the Zacks Consensus Estimate of $2,455.7 million, the same declined year over year.

Other Stocks to Consider

Investors interested in the broader Transportation sector may also check out some other stocks worth considering like United Airlines Holdings (NASDAQ:UAL), Inc. UAL , Southwest Airlines (NYSE:LUV) Co. LUV and Air Lease (NYSE:AL) Corporation AL as these too possess the perfect ingredients to beat on earnings this reporting cycle.

United Airlines has an Earnings ESP of +25.24% and a Zacks Rank #3, currently. The company will release second-quarter 2020 results on Jul 21.

outhwest Airlines presently has an Earnings ESP of +23.80% and is a #3 Ranked player. The company will release second-quarter 2020 results on Jul 23.

Air Lease has an Earnings ESP of +23.32% and is Zacks #3 Ranked at present. The company will release second-quarter 2020 results on Aug 6.

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