Canadian National Railway Co. (CNI) Coverage Initiated at Loop Capital
Stock analysts at Loop Capital began coverage on shares of Canadian National Railway Co. (NYSE:CNI) in a research report issued on Monday. The firm set a “hold” rating and a $64.00 price target on the stock.
The analysts wrote, “With the railroad operating ratio falling from 89 percent at the time of the IPO to ~56 percent this year, and with pricing continuing to outpace productivity-adjusted cost inflation, it’s only a matter of time before management will be forced to choose whether or not to cross the 50 percent Rubicon, triggering greater regulatory scrutiny including possible re-regulation,” analyst Rick Paterson wrote in a note.Paterson said the business should remain “somewhat stagnant” in to 2017 due to weak energy markets and lower demand from industries. However, grain and intermodal are the two bright spots in otherwise dull story.Related Link: The Week In Rails: Carloads For The Big 6The analyst expects the company’s intermodal volumes in 2017 to be positive versus year-to-date decline of 2.2 percent in 2016. In terms of materiality, intermodal and agriculture combined represent 40 percent of total year-to-date sales at Canadian National.Meanwhile, pricing is inflating faster than costs and the analyst expects 2017 core pricing to be in the low- to mid-2 percent range. In fact, the Canadian Transportation Agency, in formulating its latest grain cap projects the company’s (and Canadian Pacific Railway Limited (USA) (NYSE: CP)’s) wage and benefits inflation in 2016/2017 projected to be 1.4 percent, materials inflation of 1.5 percent, and other non-fuel items up 1.2 percent. “So the margin story isn’t, quite, over for CN, and if we factor in some headwind from likely higher fuel prices in 2017 we still come up with a 60 basis point improvement in the operating ratio to 55.1 percent and EPS a little over $5/share,”
Several other equities research analysts have also recently weighed in on the company. Royal Bank Of Canada reiterated an “outperform” rating and issued a $89.00 target price on shares of Canadian National Railway in a report on Tuesday, July 26th. Argus assumed coverage on Canadian National Railway in a research note on Tuesday, June 21st. They set a “buy” rating and a $73.00 price objective for the company. Atlantic Securities assumed coverage on Canadian National Railway in a research note on Thursday, August 11th. They set a “neutral” rating for the company. Desjardins restated a “hold” rating and set a $86.00 price objective on shares of Canadian National Railway in a research note on Tuesday, July 26th. Finally, Barclays PLC upped their price objective on Canadian National Railway from $65.00 to $68.00 and gave the stock an “equal weight” rating in a research note on Monday, September 12th. Two investment analysts have rated the stock with a sell rating, fourteen have issued a hold rating and ten have given a buy rating to the company. The company currently has a consensus rating of “Hold” and a consensus target price of $73.49.
Shares of Canadian National Railway (NYSE:CNI) opened at 64.00 on Monday. Canadian National Railway has a 1-year low of $46.23 and a 1-year high of $66.22. The firm’s 50 day moving average price is $63.93 and its 200-day moving average price is $61.65. The company has a market capitalization of $49.38 billion, a P/E ratio of 18.62 and a beta of 1.12.
Canadian National Railway (NYSE:CNI) last issued its earnings results on Monday, July 25th. The company reported $1.11 earnings per share for the quarter, topping the Thomson Reuters’ consensus estimate of $1.09 by $0.02. Canadian National Railway had a return on equity of 24.13% and a net margin of 29.55%. The business earned $2.84 billion during the quarter, compared to analysts’ expectations of $3 billion. During the same period in the prior year, the business earned $1.15 EPS. The business’s revenue for the quarter was down 9.1% compared to the same quarter last year. Analysts expect that Canadian National Railway will post $3.39 EPS for the current year.
The business also recently announced a dividend, which will be paid on Friday, September 30th. Investors of record on Friday, September 9th will be issued a dividend of $0.288 per share. The ex-dividend date is Wednesday, September 7th. Canadian National Railway’s dividend payout ratio (DPR) is 33.72%.
A number of hedge funds have recently bought and sold shares of CNI. Shell Asset Management Co. raised its stake in Canadian National Railway by 8.4% in the second quarter. Shell Asset Management Co. now owns 159,480 shares of the company’s stock valued at $12,167,000 after buying an additional 12,293 shares during the period. Legal & General Group Plc increased its position in shares of Canadian National Railway by 4.8% in the first quarter. Legal & General Group Plc now owns 2,960,795 shares of the company’s stock worth $185,776,000 after buying an additional 136,740 shares in the last quarter. Independent Portfolio Consultants Inc. increased its position in shares of Canadian National Railway by 2.0% in the second quarter. Independent Portfolio Consultants Inc. now owns 5,235 shares of the company’s stock worth $309,000 after buying an additional 105 shares in the last quarter. British Columbia Investment Management Corp increased its position in shares of Canadian National Railway by 1.4% in the second quarter. British Columbia Investment Management Corp now owns 121,500 shares of the company’s stock worth $5,525,000 after buying an additional 1,700 shares in the last quarter. Finally, Fulton Bank N.A. increased its position in shares of Canadian National Railway by 0.5% in the second quarter. Fulton Bank N.A. now owns 10,474 shares of the company’s stock worth $618,000 after buying an additional 50 shares in the last quarter. 56.06% of the stock is currently owned by hedge funds and other institutional investors.
About Canadian National Railway
Canadian National Railway Co is engaged in the rail and related transportation business. The Company’s network of approximately 20,000 route miles of track spans Canada and mid-America, connecting approximately three coasts, including the Atlantic, the Pacific and the Gulf of Mexico. The Company’s freight includes approximately seven commodity groups, such as petroleum and chemicals, metals and minerals, forest products, coal, grain and fertilizers, intermodal and automotive.
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