Canadian National: The Lone Railway Expected to Report Q1 Gains

Apr.12.09 | About: Canadian National (CNI)

Canadian National Railway Co. (NYSE:CNI) is the only top-tier North American railway expected to make gains in the first quarter with earnings season set to kick off next week, according to UBS analyst Rick Paterson.

The country’s largest railway is expected to post earnings of C$.62 a share - a modest 2% gain year over year - during the quarter despite significant volume declines, Mr. Paterson said in note to clients Thursday. CN will report its results on April 20. CSX will be the first Class-1 railway to report on Tuesday.

Overall, the U.S. Big Four Railways are expected to report on average a 20% decline year-over-year in their first quarter earnings over the next two weeks, Mr. Paterson said.

Canadian Pacific Railway Limited, CN’s smaller domestic rival, is expected to be hit the hardest by declining coal and potash volumes and is expected to post a 51% earnings slide compared to last year, or roughly C$.37 a share, he added. CP reports on April 23.

Mr. Paterson said:

“We’ll be closely monitoring how well the rails were able to recalibrate their networks to match the extreme volume declines. Given the recent weeks of dismal AAR data, we’d be surprised to receive any firm EPS guidance and any mention of a bottom should be taken with a grain of salt.”

U.S. carloads fell 21% last week compared to last year on lower metal, autos and building materials. Canadian carloads fell 26% on lower coal, metals, and autos during the week.