Episode
Canadian National Railway Stock: It Beat and Raised Guidance — Why We Still Say HOLD (CNI Q2 2026)
- Published
- Jul 24, 2026
- Duration seconds
- 839
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Summary
Canadian National Railway (CNI) Q2 2026 — Canadian National Railway (CNI on the NYSE, CNR on the TSX) — the only railroad whose network reaches three coasts and one of North America's premier franchises — reported a Q2 2026 beat-and-raise (all figures in Canadian dollars, US GAAP): adjusted diluted EPS of C$2.08 beat the ~C$1.93 estimate (+11% YoY; reported EPS C$2.06, +10%) on revenue of C$4.75B (+11%), operating income of C$1.78B (+9%) and net income of C$1.25B. But the marquee operating ratio ROSE 80 bps to 62.5% (adjusted 62.2%) — the beat came from volume (RTMs +5%) and pricing (freight revenue/RTM +6%, revenue/carload +12% to C$3,236), not efficiency, as diesel prices jumped ~60% (C$5.67 vs C$3.55/gal) and swamped a fuel-efficiency record. Carloads were flat (1.41M). Grain & fertilizers (+18%), petroleum & chemicals (+16%) and automotive (+18%) led; coal was flat. CN RAISED full-year guidance (RTM growth flat to low-single-digit; adjusted EPS growth to mid-to-high single digit), kept ~C$2.8B capex, grew first-half free cash flow 19% to C$1.84B, tripled first-half buybacks to C$1.32B, and raised the dividend to C$0.9150/quarter. Yet on the NYSE line the stock (~US$129, near its US$131.51 52-week high, ~23x forward earnings) sits above our owner-earnings DCF fair value of ~US$118 (C$ cash flows converted at US$0.71/C$) — and above even Wall Street's ~US$119 average target. Our call: HOLD, 3/5. Not financial advice. Canadian National Railway is one of the widest-moat businesses in North America — a transcontinental railroad whose nearly 19,000-mile network is the only one reaching three coasts (Canada's Atlantic and Pacific, and the U.S. Gulf), moving over 300 million tons a year. A key note up front: CN reports in Canadian dollars, while its NYSE line (CNI)…