Canadian National Railway Company
CNI · NYSE
Next quarter
Expected to report Oct 30, 2026 — estimated from last year’s reporting date.
Consensus is $1.48 EPS for Sep 2026 across 8 estimates, ranging $1.43 to $1.53.
CNI Jun 2026
- 7.91%
- -0.46%
- $1.39
- $1.50
- —
- —
Highlights
- Earnings beat: The supplied consensus comparison records EPS of $1.50 versus $1.39 expected, a 7.91% surprise; CN's release separately reports GAAP diluted EPS of $2.06 and adjusted diluted EPS of $2.08.
- Revenue acceleration: Second-quarter revenue rose 11% year over year to $4.753 billion, driven by 5% higher revenue ton miles and a 6% increase in freight revenue per RTM to 7.32 cents.
- Grain-led growth: Grain and fertilizers revenue increased 18% to $980 million, while petroleum and chemicals, automotive and intermodal revenue rose 16%, 18% and 8%, respectively.
- Profit growth despite cost pressure: Operating income increased 9% to $1.781 billion and net income rose 7% to $1.249 billion, but the operating ratio worsened 0.8 points to 62.5%.
- Fuel was the main headwind: Fuel expense increased 60%, or $246 million, to $659 million, while total operating expenses rose 13% to $2.972 billion.
- Network execution was mixed: Revenue ton miles rose 5%, train speed improved 1% to 19.1 mph and fuel efficiency improved 3% to 0.836 gallons per 1,000 gross ton miles, but through dwell increased 4% to 7.1 hours and car velocity fell 1% to 211 miles per day.
- Outlook upgraded: CN now assumes low single-digit 2026 revenue ton mile growth, versus its prior assumption of flattish growth, while retaining its approximately $2.8 billion capital program.
- Cash generation and returns: Free cash flow increased 2% to $942 million; CN repurchased 2.9 million shares for $454 million in the quarter and had repurchased 7.2 million shares for $1.075 billion under its current program by June 30.
- Strategic access: CN and Union Pacific agreed to a memorandum covering new CN rights over UP's network between Canada and Mexico and expanded UP rights around Chicago, subject to Surface Transportation Board approval.
Analysis
CN's second quarter was a volume-led growth quarter with a stronger outlook, although fuel and operating costs absorbed much of the revenue benefit. Revenue increased 11% year over year to $4.753 billion, operating income rose 9% to $1.781 billion and net income grew 7% to $1.249 billion. GAAP diluted EPS was $2.06, up 10% from $1.87 a year earlier, and adjusted diluted EPS was $2.08. Sequentially, revenue increased from $4.379 billion in the first quarter, while operating income rose from $1.549 billion and net income from $1.146 billion. The supplied analyst comparison records EPS of $1.50 against a $1.39 consensus, or a 7.91% beat, which does not reconcile with the EPS figures in CN's release.
The defining feature was broad freight momentum, led by grain and fertilizers, petroleum and chemicals, automotive and intermodal. RTMs rose 5% and freight revenue per RTM increased 6%, but expenses grew 13%, including a 60% jump in fuel expense. CN's operating ratio therefore deteriorated to 62.5% from 61.7% despite improved train speed and fuel efficiency. Management raised its 2026 volume assumption to low single-digit RTM growth, maintained roughly $2.8 billion of capital spending, and continued shareholder returns through buybacks and a quarterly dividend of $0.9150 per share.
Volume and revenue growth
CN's top-line performance improved sharply from the first quarter and was led by a combination of higher traffic and better pricing. Second-quarter revenue rose $481 million year over year to $4.753 billion, while freight revenue increased 11% to $4.559 billion. RTMs grew 5% to 62,250 million and freight revenue per RTM rose 6% to 7.32 cents.
- Grain and fertilizers: Revenue increased 18% to $980 million as Canadian and U.S. grain exports strengthened; RTMs rose 11% and revenue per RTM increased 6%.
- Petroleum and chemicals: Revenue rose 16% to $941 million, supported by refined petroleum products and natural gas liquids; RTMs increased 11%.
- Automotive: Revenue increased 18% to $285 million on higher imports and transborder finished-vehicle shipments.
- Intermodal: Revenue grew 8% to $1.087 billion, despite a 1% decline in RTMs, as revenue per RTM increased 9%; lower international shipments through Prince Rupert were partly offset by stronger domestic and Vancouver traffic.
- Weaker categories: Metals and minerals revenue rose 6% in the quarter on pricing despite 1% lower RTMs, while coal revenue was flat and first-half forest-products revenue fell 3% amid weak lumber conditions and U.S. trade duties.
Margins and operating costs
The quarter delivered operating leverage on an adjusted basis, but not enough to offset inflation in fuel and other operating inputs. Operating expenses increased 13% to $2.972 billion, ahead of the 11% revenue increase. Operating income rose 9% to $1.781 billion, while the operating ratio increased 0.8 points to 62.5%; excluding $17 million of advisory costs related to rail consolidation matters, the adjusted ratio was 62.2%, still 0.5 points worse year over year.
- Fuel pressure: Fuel expense increased 60% to $659 million, adding $246 million year over year, mainly because of higher fuel prices.
- Labor and purchased services: Labor and fringe benefits rose 3% to $889 million, while purchased services and materials rose 11% to $641 million, including $17 million of rail-consolidation advisory costs.
- Underlying earnings: Net income increased 7% to $1.249 billion and adjusted net income rose 8% to $1.261 billion. Adjusted diluted EPS was $2.08 versus $1.87 a year ago.
Network performance
CN said its scheduled operating plan absorbed higher-than-expected volumes while maintaining generally favorable first-half operating trends. The quarter was not uniformly better, however: terminal dwell and car velocity deteriorated even as line-haul speed, train sizing and fuel consumption improved.
- Efficiency gains: Train speed increased 1% to 19.1 mph, train length rose 1% to 8,084 feet, and fuel efficiency improved 3% to 0.836 gallons per 1,000 GTMs.
- Fluidity pressure: Through dwell increased 4% to 7.1 hours and car velocity decreased 1% to 211 car miles per day.
- Safety: The injury frequency rate increased to 1.01 from 0.83, while the accident rate rose to 2.30 from 1.56 per million train miles.
Outlook and rail access
CN raised its 2026 volume assumption to low single-digit RTM growth from the previous assumption of flattish growth. The upgrade reflects stronger first-half traffic and above-average 2025/2026 grain crops, although management continues to flag macroeconomic volatility, geopolitical conflict and trade tensions as demand risks. The company retained its approximately $2.8 billion 2026 capital program.
- Union Pacific agreement: CN and UP announced a memorandum under which CN would obtain new rights over UP's network for Canada-Mexico traffic, while UP would receive expanded rights over CN's former EJ&E corridor around Chicago.
- Regulatory condition: The commercial agreement depends on Surface Transportation Board approval and is linked to the proposed UP-Norfolk Southern transaction.
- Labor: All twelve U.S. unions participating in the latest national bargaining round reached and ratified agreements in July 2026.
Cash returns and balance sheet
Cash generation remained solid, though operating cash flow declined because of working-capital movements. Free cash flow rose modestly while CN continued to return substantial capital and fund its network.
- Free cash flow: Free cash flow increased 2% to $942 million in the quarter and 19% to $1.842 billion in the first half.
- Capital spending: Property additions were $695 million in the quarter and $1.134 billion in the first half, within the full-year capital plan.
- Share repurchases: CN repurchased 2.9 million shares for $454 million in the quarter and 8.9 million shares for $1.323 billion in the first half; 7.2 million shares had been repurchased under the current NCIB by June 30.
- Leverage and liquidity: Adjusted debt of $23.056 billion represented 2.61 times trailing adjusted EBITDA, versus 2.50 times a year earlier. CN had $3.0 billion of revolving credit capacity and no borrowings under the revolver at June 30.
