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Research Alert: Cni Q1: Eps Beats, Revenue Lags, Operational Gains Amid Headwinds

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-- CFRA, an independent research provider, has providedwith the following research alert. Analysts at CFRA have summarized their opinion as follows:

CNI posted Q1 adjusted EPS of CAD1.80, topping our CAD1.73 estimate but missing the consensus CAD1.81 forecast. Revenue declined 1% to CAD4.38B, as 3% volume growth was offset by a 3% freight revenue per RTM decline from FX and carbon tax headwinds. The operating ratio deteriorated 80 bps to 64.2%, as cost inflation outpaced revenue growth despite operational improvements including record Q1 fuel efficiency and 8% employee productivity gains. Segment performance was mixed: grain/fertilizers surged 10% while metals/minerals fell 11%, though underlying momentum remained solid with 2% constant currency revenue growth. Management reiterated expectations for flattish RTM growth in FY 26, with EPS growth slightly exceeding volume growth and a continued CAD2.8B capex program. FCF surged 44% to CAD900M, supporting CAD869M in share repurchases. We view the strong operational metrics and cash generation positively, though margin pressure from inflationary costs and FX headwinds remains a near-term concern.

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