Canadian National Railway Company (CN) Earnings
Canadian National Railway Company (CN) has disclosed its financial results for the fourth quarter of 2024, exhibiting several setbacks amidst its operational landscape. Despite challenges, CN embarks on 2025 with initiatives aimed at shareholder value and growth strategies. Below, we dive deeper into the current standing and future prospects of CN.
Key Financial Metrics
| Financial Metric | Q4 2024 | Q4 2023 | YoY Change |
|---|---|---|---|
| Revenue (C$) | 4,358M | 4,471M | -3% |
| Operating Income (C$) | 1,628M | 1,818M | -10% |
| Operating Ratio | 62.6% | 59.3% | +3.3 pts |
| Diluted EPS (C$) | 1.82 | 3.31 | -45% (or -10% adjusted) |
CN witnessed a contraction across key financial indicators compared to the same period last year. A 3% reduction in revenue and a noticeable 10% drop in operating income signal pressing operational hurdles. The diluted earnings per share (EPS) plunged 45% from C$3.31 to C$1.82, exacerbating the financial narrative dominated by a challenging business environment.
Canadian National Railway Company (CN) Results
In addition to a careful analysis of the above-stated metrics, the change in the operating ratio helps dissect operational efficiencies. There is a 3.3 percentage point increase in the operating ratio, ascending from 59.3% in Q4 2023 to 62.6% in Q4 2024. This rise represents a higher cost burden relative to revenue, which could pose longer-term sustainability concerns if not addressed. The decline in adjusted EPS by 10% suggests that despite normalization in reported earnings, fundamental pressures remain.
Revenue Breakdown
| Segment | Q4 2024 Revenue (C$ Million) | Comment |
|---|---|---|
| RTMs (in millions) | 59,305 | Decline of 3% |
The 3% regression in Revenue Ton Miles (RTMs) reveals integral shrinkage in transport volumes that lie at the core of CN's revenue-generating activities. It points to a subdued demand environment or potential inefficiencies in logistical execution, both of which require strategic recalibration to reignite revenue lanes.
Key Developments
Despite a testing period, CN is taking direct steps to solidify shareholder returns and fortify its operational base. The Board has authorized a 5% increment in quarterly cash dividends for Q1 2025, demonstrating the company's commitment to rewarding shareholders consistently—marking a twenty-nine-year streak. Additionally, CN has declared a Normal Course Issuer Bid (NCIB), with plans to repurchase up to 20 million common shares over the next year, reflecting confidence in the company's intrinsic value.
Expanding on operational capacities, CN intends to inject approximately C$3.4 billion in its capital program for 2025 (net of customer reimbursements), a bold move that underlines dedication to enhancing infrastructure and service reliability.
Comments from Company Officers
Tracy Robinson, President and CEO, expressed optimism, acknowledging the company's firm footing as it advances into 2025. Robinson emphasized CN’s adeptness in navigating the turbulence faced in 2024 and the collective resolve to leverage operational synergies and client partnerships for driving growth. The structural flexibility and robust network support CN's purposeful expansion endeavors.
Dividends and Share Repurchases
CN’s reinforced dividend strategy and share repurchase plans create ample insulation against market volatilities while magnifying shareholder yields. The perennial growth in dividends and repurchase initiatives solidify the investor trust and provide a springboard for future capital gains.
Canadian National Railway Company (CN) Stock Forecast
Currently priced at C$104.9, CN faces cautious tailwinds in the short term with a marginal post-announcement dip of approximately 0.60%. However, with market capitalization holding at C$75.1 billion and strategic alignments around capital investments and operational efficiencies, there lies potential for measured growth in stock valuation.
Stock Price Projections : - High Projection : C$120.00 - Low Projection : C$95.00
These projections reflect a blend of CN’s strategic initiatives against the backdrop of market and operational contemplation. They envisage a resilient yet cautious climb, contingent on successfully addressing transportation volumes and cost dynamics while capitalizing on new growth frontiers.
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