Canadian National Railway Company (CNI) reported fourth-quarter 2024 earnings of $1.30 per share (C$1.82), which missed the Zacks Consensus Estimate of $1.37 and declined 12.1% on a year-over-year basis.
Revenues for the fourth quarter of 2024 were $3.11 billion (C$4.35 billion), which surpassed the Zacks Consensus Estimate of $3.07 billion but declined year over year.
Revenue ton-miles (RTMs or a measure of volumes) decreased 3% year over year. Carloads decreased 5% on a year-over-year basis. Freight revenue per RTM marginally rose 0.1% year over year.
Operating expenses for the fourth quarter of 2024 rose 3% from the year-ago figure. The increase was mainly due to higher labor and fringe benefit expenses and a rise in purchased services and material costs.
Operating income for the fourth quarter of 2024 declined 11% from the fourth quarter of 2023 actuals. The operating ratio, defined as operating expenses as a percentage of revenues on an adjusted basis, deteriorated to 62.6% in the fourth quarter of 2024 from 59.3% in the fourth quarter of 2023.
Canadian National Railway Company Price, Consensus and EPS Surprise
Canadian National Railway Company price-consensus-eps-surprise-chart | Canadian National Railway Company Quote
CNI’s Segmental Highlights
Freight revenues, which contributed 95.9% to the top line, decreased 3% year over year, wider than our anticipated decline of 0.7%. Freight revenues in petroleum and chemicals and grain and fertilizers rose 1% and 4% year over year, respectively.
Revenues in metals and minerals, forest products, coal, intermodal and automotive segments declined 4%, 3%, 4%, 8%, and 20%, respectively, compared with 2023 figures.
Segment-wise, carloads in petroleum and chemicals, metals and minerals, forest products, coal, intermodal and automotive segments decreased 2%, 4%, 5%, 10%, 6% and 18%, respectively. The same in the grain and fertilizers segment rose 4% year over year.
CNI’s Liquidity
Canadian National ended the fourth quarter with cash and cash equivalents of C$389 million compared with C$273 million at the end of the prior quarter. CNI exited the fourth quarter with a long-term debt of C$19.7 billion compared with C$18.6 billion at the end of the prior quarter.
CNI generated C$1.99 billion of cash from operating activities. Free cash flow came in at C$1.03 billion.
CNI’s board of directors approved a dividend hike of 5% in its quarterly cash dividend, effective from the first quarter of 2025. This is the 29th consecutive year of dividend increases. Additionally, CNI’s board has also approved a new Normal Course Issuer Bid, which allows CNI to purchase for cancelation over a 12-month period up to 20 million common shares, beginning from Feb. 4, 2025, and ending no later than Feb. 3, 2026. CNI continues to manage its adjusted debt-to-adjusted EBITDA target of 2.5x.
CNI’s Outlook
For 2025, CNI anticipates delivering 10%-15% adjusted earnings per share (EPS) growth and plans to invest approximately C$3.4 billion in its capital program, net of amounts reimbursed by customers.
Further, CNI assumes North American industrial production growth will be almost 1% in 2025.
CNI assumes RTM growth will be in the low to mid-single-digit range. The company also expects that in 2025, the value of the Canadian dollar in U.S. currency will be approximately $0.70 and that the average price of crude oil (West Texas Intermediate) will be in the range of $70-$80 per barrel.
From 2024 to 2026, CNI aims for compounded annual adjusted diluted EPS growth in the high single-digit range.
CNI’s Zacks Rank
Currently, Canadian National carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Q4 Performances of Other Transportation Companies
Delta Air Lines DAL reported fourth-quarter 2024 earnings (excluding 56 cents from non-recurring items) of $1.85 per share, which surpassed the Zacks Consensus Estimate of $1.76. Earnings increased 44.5% on a year-over-year basis due to low fuel costs.
DAL’srevenues of $15.56 billion surpassed the Zacks Consensus Estimate of $14.99 billion and increased 9.4% on a year-over-year basis, driven by strong holiday travel demand. Adjusted operating revenues (excluding third-party refinery sales) totaled $14.44 billion, up 5.7% year over year. Passenger revenues, which accounted for 82.4% of total revenues, increased 5% year over year at $12.82 billion.
J.B. Hunt Transport Services (JBHT) reported fourth-quarter 2024 earnings per share of $1.53, which fell short of the Zacks Consensus Estimate of $1.62. However, the bottom line increased 4.1% on a year-over-year basis.
JBHT’s total operating revenues of $3.15 billion narrowly beat the Zacks Consensus Estimate of $3.13 billion but declined 4.8% year over year. The decline was mainly due to lower fuel surcharge revenues and yield pressure in its Intermodal segment.
JBHT’s fourth-quarter 2024 operating revenues of $2.78 billion, excluding fuel surcharge revenue, decreased 2% from the year-ago reported quarter. Total operating income for the reported quarter increased 2% year over year to $207 million.
Alaska Air Group, Inc. (ALK) reported solid fourth-quarter 2024results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate. Quarterly earnings per share of 97 cents outpaced the Zacks Consensus Estimate of 47 cents and improved more than 100% on a year-over-year basis. The reported figure exceeded the guided range of 40-50 cents.
ALK’s bottom line benefitted from solid revenue growth, cost and operational performance throughout the quarter and holiday travel periods. ALK also benefitted from a renegotiation of certain interest payments and favorability in its fourth-quarter tax rate.
ALK’s operating revenues of $3.53 billion beat the Zacks Consensus Estimate of $3.51 billion. The top line jumped 38.4% year over year, with passenger revenues accounting for 89.9% of the top line and increasing 37% owing to continued recovery in air-travel demand.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
