Canadian National (CNI) Q3 Earnings: What's in the Cards?

Canadian National Railway CNI, a rail and rail-related transportation business operator, is scheduled to report third-quarter 2016 results on Oct 25, after the market closes.

Last quarter, the company posted a 3.61% positive earnings surprise. Moreover, the company’s bottom line surpassed the Zacks Consensus Estimate in all of the past four quarters, with an average beat of 6.50%. Let’s see how things are shaping up for this announcement.

Factors at Play this Quarter

Canadian National expects markets like automotive, lumber and panes, refined petroleum products, and grains to improve in the second half of 2016. Based on the company’s bullish outlook, we expect that the company’s third-quarter results to benefit from the market conditions. Moreover, the company has a strong balance sheet and an impressive shareholder return policy

However, the company’s top line is expected to be adversely impacted by coal volumes. Some of Canadian National’s peers, such as Union Pacific Corp UNP and Canadian Pacific Raiways Ltd. CP, missed earnings estimates in the third quarter due to low coal volumes as well as other headwinds. Another concern for Canadian Pacific is the tough competition it faces from trucking companies.

Earnings Whispers

Our proven model does not conclusively show that Canadian National is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below.

Zacks ESP: The Most Accurate estimate stands at 90 cents, while the Zacks Consensus Estimate is pegged at 92 cents. Hence, the Earnings ESP is -2.17%.

Zacks Rank: The company carries a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s negative ESP makes surprise prediction difficult.

Conversely, we caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

CDN NATL RY CO Price and EPS Surprise

 

CDN NATL RY CO Price and EPS Surprise | CDN NATL RY CO Quote

Stock to Consider

Here is a company you may want to consider, as our model shows that it has the right combination of elements to post an earnings beat this quarter:

Navios Maritime Holdings Inc. NM, which is expected to report third-quarter earnings on Nov 28, has an Earnings ESP of +15.39% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here. 

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