CNI

Get insights on thousands of stocks from the global community of over 7 million individual investors at Simply Wall St. Canadian National Railway stock has delivered a 42.5% total return over the past five years, yet current checks suggest the shares may now be trading at a premium to an intrinsic value estimate built on future cash flows, while market multiples look closer to fair. A 42.5% five year return sets a high bar for new buyers, since a lot of optimism can already be baked into the price. Progress on hybrid locomotives and record grain volumes can support long term cash flow expectations, while ongoing concerns around macro risks and operating costs may limit how much investors are willing to pay for that growth. With a value score of 3 out of 6, Canadian National Railway screens as a mixed picture rather than a clear bargain or a clearly expensive stock. The issue now is whether Canadian National Railway's recent gains leave enough valuation support if growth or margins come under pressure. Canadian National Railway delivered 38.2% returns over the last year. See how this stacks up to the rest of the Transportation industry. The Discounted Cash Flow model estimates what Canadian National Railway’s future cash flows might be worth in today’s money. On this view, the latest twelve month free cash flow sits at about CA$3.5b, with the model assuming that cash flows continue to grow from this base rather than shrink. Those projections translate into an intrinsic value estimate of about CA$157 per share, which is below the current share price. On this method, the stock screens as around 13.7% overvalued. The recent progress on hybrid locomotives helps explain why investors may be willing to pay up for Canadian National Railway’s future cash flows, even if the model points to limited valuation support. On this Discounted Cash Flow view, Canadian National Railway stock currently looks overvalued relative to its estimated intrinsic value. Our Discounted Cash Flow (DCF) analysis suggests Canadian National Railway may be overvalued by 13.7%. Discover 14 high quality undervalued stocks or create your own screener to find better value opportunities. Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Canadian National Railway. P/E is usually a clean way to compare Canadian National Railway with other established rail and transport companies that already generate steady earnings. On this measure, the stock trades on about 22.6x earnings, which is above the Transportation industry average of 13.4x, yet below a peer group average of roughly 31.1x. A more tailored fair P/E for Canadian National Railway, based on factors like its margins, size and risk profile, sits around 23.5x. That is only slightly above the current multiple, so the stock does not screen as meaningfully cheap or stretched on earnings alone. The market seems to be assigning a modest premium versus the wider industry without pushing the valuation up to the richer peer levels. On the P/E multiple, Canadian National Railway stock looks roughly fairly valued. See what the numbers say about this price — find out in our valuation breakdown. Simply Wall St Narratives for Canadian National Railway pick up where the valuation models leave off and explain what kind of future growth, margins and earnings would need to occur for the stock to be worth materially more or less than today’s price, based on scenarios shared on the Community page. Instead of relying on a single multiple or model, each Narrative details the assumptions behind its view of fair value so you can compare them with actual results over time. Community views on Canadian National Railway are split, with one narrative seeing upside from the network and buybacks while another flags valuation risk. Bull case: 6% undervalued Read the full Bull Case to see why Canadian National Railway could be undervalued Bear case: 34% overvalued Read the full Bear Case to see why Canadian National Railway could be overvalued Do you think there's more to the story for Canadian National Railway? Head over to our Community to see what others are saying! Canadian National Railway looks mildly overvalued on a Discounted Cash Flow (DCF) view, while the P/E comparison suggests pricing that is roughly in line with what similar companies trade on. That split reflects the usual tension between cash flow timing and capital needs on one side and market expectations and sentiment on the other. With broader checks pointing to a mixed picture rather than a clear opportunity, the key question from here is whether Canadian National Railway can sustain the cash flow and margin profile that current expectations imply. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include CNR.TO. Have feedback on this article? Concerned about the content? Get in touch with us directly. 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This article first appeared on GuruFocus. Release Date: August 05, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. voestalpine AG (VLPNY) achieved solid earnings and free cash flow in a difficult environment, supported by its robust strategy. The company's Greentech Steel project is on time and on budget, with the first electric arc furnaces set to ramp up in 2027, reducing CO2 emissions by 30% by 2029. voestalpine AG (VLPNY) secured long-term contracts, including a 10-year deal with Canadian National Railway and the Rail Baltica contract, strengthening its railway systems business. The flat steel division gained market share in the automotive industry due to strong quality and logistics performance, contributing to a very good performance. The company's reorganization and portfolio optimization efforts are on track, with significant cost savings already realized, including a reduction of over 900 employees year-on-year. voestalpine AG (VLPNY) expects positive results from the EU safeguard measures and CBAM, with price increases anticipated in the second half of the year. The balance sheet remains solid with reduced net debt, providing room for strategic growth, particularly in railway systems and aerospace. voestalpine AG (VLPNY) faces ongoing trade-related uncertainties, particularly from US tariffs, which have disrupted markets and impacted the tubulars business. The automotive components business is challenged by weak demand from European OEMs, requiring additional restructuring measures. The company's tubulars and heavy plate businesses are suffering from project delays due to the conflict in the Middle East, with limited visibility on when conditions will improve. Customer inventories in the European steel market are elevated due to pre-ordering ahead of safeguard measures, which may take until autumn to normalize. voestalpine AG (VLPNY) continues to incur restructuring costs, with 16 million euros booked in the first quarter, and faces headwinds in construction and mechanical engineering markets. The high-performance metals division is experiencing subdued tooling markets in Europe and North America, although partially offset by strong aerospace demand. The company's guidance for EBITDA remains unchanged at 1.6 to 1.85 billion euros, reflecting persistent uncertainty and mixed market conditions. Warning! GuruFocus has detected 7 Warning Signs with VLPNY. Is VLPNY fairly valued? Test your thesis with our free DCF calculator. Q: Can you remind us if you will incur any ramp-up costs for the new electric arc furnaces (EAFs) over the course of 2027, and how will the like-for-like margins compare to your existing blast furnaces as you commission the EAFs and decommission the blast furnaces?A: CFO Gerald Mayer: We do not assume significant ramp-up costs. Our R&D department has been preparing for a smooth ramp-up, and we have a testing environment in Donawitz. In Linz, it will take roughly 150-200 people to run the new equipment, and we are not forced to take our blast furnaces out of production immediately. On margins, we will see reduced CO2 burdens from the ETS system (we paid over 200 million last year), and we are working with customers to secure green premiums. CEO Herbert Eibensteiner added that there is demand for greener steel, particularly from automotive and railway customers, and we will stick to our high-quality strategy even with the EAF route. Q: Based on your initial assessment of the revamped ETS framework, how do you expect it to impact your business, and do you think you may be able to apply for retroactive grants for your Greentech investments?A: CEO Herbert Eibensteiner: The first announcement was positivethere is a longer curve for free allowancesbut it's not enough. There will be a lot of discussions with the commission and parliaments; we are at the beginning of a long path. On subsidies, we received 90 million for the first step of Greentech, and we will go for subsidies for the second step as well, though it's still open. Q: You mentioned a strong second-half for the steel division. Can you give us some detail around what you're assuming in your guidance with respect to price increases?A: CEO Herbert Eibensteiner: The price increase coming from CBAM and the EU safeguard is around 100 per ton plus, starting in January. In our planning, we see this as achievable. Due to our contract structure (yearly and half-yearly contracts), we are already halfway there, and we expect to see the full 100 per ton by the end of our fiscal year because of the time lag in our contract structure. Q: Your balance sheet is looking pretty good with net debt down. How are you thinking about strategic flexibility and using the balance sheet to reach your medium-term return target?A: CEO Herbert Eibensteiner: Our strategic goal is to grow in certain areas, most notably railway systems, which is currently a 2.2 billion business. Our goal is to reach 3 billion after 2030, which will require acquisitions. We have a shortlist of targets. Aerospace is more organic growth, and warehouse and rack solutions also offer M&A opportunities. These are all high-ROCE targets. Our capital allocation strategy gives us room to follow Greentech, growth, and dividends. Q: For the Donawitz second EAF, can you give us reassurance that you can deliver the 100 million CapEx number given cost inflation? Also, are there any other one-off items for Q2 EBITDA modeling, and how is progress on the 400 million cost-saving journey?A: CFO Gerald Mayer: No significant one-offs are expected for the rest of the year. On cost savings, we are roughly 400 FTEs down in metal forming, which adds up to roughly 40 million in savings this year. Our clear plan remains to achieve 400 million plus/minus in EBITDA by the end of 2028/29 for both HPM and metal forming divisions. CEO Herbert Eibensteiner added on Donawitz: The EAF equipment is tailored to our specific demands. We already invested the basic CapEx for the second step; the 100 million is for logistics, additional energy supply, and secondary metallurgical treatment. With this, we get fully electrified production in Donawitz, leading to the shutdown of two blast furnaces and the sinter plant by 2030, reducing employees by around 450 people. Q: Can you give us more information on customer inventorieshow long will it take to revert to normalized levels, and which businesses saw the most pronounced inventory increases before the regulatory measures? Also, can you give figures on restructuring one-offs going forward?A: CFO Gerald Mayer: We booked 16 million in restructuring this quarter. From next year onwards, you will see a similar magnitude of cost release. The rest relates to consolidating warehouse activities and taking down stock values. On customer inventories, CEO Herbert Eibensteiner added: We see some customers wanting to buy earlier in expectation of higher prices, while steel service centers are fully booked. From experience, I would say normalization will occur in October or November, which would be a good environment for January price negotiations. Q: On the cladded plate business, is there pent-up demand, and what indications are you getting from customers? Also, on metal engineering's seamless business (tubulars), what other than policy change can help turn it around, and would you consider a sale?A: CFO Gerald Mayer: On tubulars, we are not burning moneywe had a very small single-digit negative number in Q1, but we expect to generate cash flow going forward. We are managing through the storm, and we expect price pickups in the US. The Middle East war is the main issue; we assume it could be very positive when the war stops. We've reduced a shift and taken other measures so we don't burn money. CEO Herbert Eibensteiner added on cladded plates: We are finishing old orders, and several projects (mostly deep-sea gas pipelines) are postponed until the environment improves. The projects are still alive, and we see the first tenders starting. When there is a ceasefire, there will be many projects waiting and much to repair, which will be good business for us. Q: On your reorganization efforts at the HPM division, what is a realistic medium-term EBITDA run rate excluding one-offs, and what restructuring actions still need to be executed? Also, how do you explain the discrepancy between strong steel sheet demand and struggling automotive components?A: CFO Gerald Mayer: We reconfirm that in business year 2028/29, we expect 400 million EBITDA for HPM. We are on the right track. We recognized 16 million in additional restructuring in Q1, and we do not expect material additional restructuring costs for the rest of the year or next year. CEO Herbert Eibensteiner added on autos: Steel sheet is good because we deliver to every OEM producing in Europe, so For the complete transcript of the earnings call, please refer to the full earnings call transcript.

SummaryView Transcript Railroads are seeing a significant upturn in Q2 earnings, with most Class 1 carriers raising their guidance. But the big story is the revelation of strategic deals between Union Pacific and Canadian National, directly tied to the CPKC merger. Discover how these competitive shifts will redefine domestic and cross-border rail operations, bypassing congested hubs and expanding market access for key commodities. Canadian National Railway will not oppose the proposed Norfolk Southern-Union Pacific merger after reaching two separate agreements with Union Pacific — one tied directly to the merger and one that stands on its own — that give CN a faster route to Mexico and a first-ever foothold in Kansas City, rail analyst Bill Stevens told FreightWaves. The deal that is independent of the merger grants CN haulage rights over Union Pacific’s tracks between Memphis and the Mexican border crossing at Eagle Pass, Texas, covering traffic moving between Canadian origins or destinations and Mexico. The arrangement gives CN a faster, more direct route to compete against CPKC, which already offers single-line service across Canada, the U.S., and Mexico. Currently, CN hands traffic to Union Pacific in Chicago, resulting in a shorter length of haul. In exchange, Union Pacific gains rights to use CN’s Chicago bypass — the EJ&E corridor acquired in 2009 — to avoid the city’s notoriously congested rail network. The merger-contingent piece grants CN trackage rights over Union Pacific through Missouri, running two parallel routes across the state. CN gains access to the Kansas City market for the first time operating its own trains and gets the use of Union Pacific’s underutilized Neff Yard in Kansas City. The arrangement addresses competitive concerns for roughly five shippers whose railroad options would drop from two to one under a NS-UP combination, and approximately two dozen shippers — mostly in the St. Louis area — who would go from three options to two. “CN said, hey, this solves our competitive concerns about the merger. We get growth opportunities out of it, and as a result, we will not oppose the merger,” Stevens said. The merger developments come as four of the six Class 1 railroads reported earnings this week showing broad-based volume improvement. CSX volumes were up 6%, Norfolk Southern up 4%, Canadian National up 5% on a revenue-ton-mile basis (flat at 0.35% on a carload basis), and Union Pacific up 2%. Three of the four railroads raised their financial or volume outlooks for the year. Intermodal led the gains: CSX intermodal rose 9%, Union Pacific domestic intermodal posted its fourth straight quarterly volume record with double-digit growth, and Norfolk Southern intermodal climbed 5%, driven in part by truck-to-rail conversions tied to high fuel prices. Coal results diverged sharply by railroad. Norfolk Southern coal was up significantly on exports of metallurgical coal, while Union Pacific coal fell due to high utility stockpiles and low natural gas prices. CN’s Chief Commercial Officer Janet Drysdale noted on the railroad’s earnings call that truck capacity in Canada is not as tight as in the U.S., explaining why CN’s domestic intermodal performance lagged its American peers. CN flagged tariff uncertainty, forest products weakness tied to slow U.S. housing starts, and strength in petroleum, chemicals, and grain as the key variables shaping its outlook. On the industrial side, Norfolk Southern said new plant openings and expansions across its network are running at double last year’s pace, while CSX cited data center construction as a driver of construction-related traffic. Union Pacific also pointed to manufacturing gains it expects will outpace overall industrial production — implying market share gains from truck. The Surface Transportation Board is set to receive a supplemental merger filing from Norfolk Southern and Union Pacific on Monday, ahead of a Future of Rail Symposium in Chattanooga on Tuesday where both railroads’ CEOs are scheduled to appear. CPKC reports earnings Wednesday; BNSF will report alongside parent Berkshire Hathaway next month. CN will not oppose the NS-UP merger after securing haulage rights from Memphis to Eagle Pass and first-ever access to the Kansas City market via Union Pacific’s Neff Yard. Four Class 1 railroads reported volume gains this week — CSX up 6%, NS up 4%, CN up 5% (revenue ton miles), UP up 2% — with three raising full-year outlooks, led by intermodal growth. NS-UP must file supplemental merger information with the Surface Transportation Board on Monday, with both CEOs set to discuss the deal at FreightWaves’ Future of Rail Symposium in Chattanooga on Tuesday. Speaker 1 [0:00] All right, let’s go to the other great mode of domestic surface freight. We’ve got Bill Stevens who’s going to talk, break down all of the action in the rails. It is absolutely hot. Bill, welcome to Freightways Today again. How are you, sir? Speaker 2 [0:16] I am well, Craig. Hi, hi, Julie. How are you both today? Speaker 1 [0:19] Well, we know it’s exciting. You’re going to be down in Chattanooga next Tuesday. We have the Future of Rail Symposium that will be right here in Chattanooga. We got the CEOs of probably the hottest story in freight, Norfolk Southern and Union Pacific. Now, we are told they won’t talk about the merger itself, so it’s going to be in the room. I don’t know if, if, uh, uh, if what you’re expecting to hear from that conversation. Speaker 2 [0:43] Well, um, our timing is perfect because on Monday they are going to file the supplemental information that the Surface Transportation Board asked for regarding the merger. So that is going to be question number one. What does this additional merger do that can— Speaker 3 [1:00] or additional information do that can help get your merger across the finish line from a regulatory review perspective? Um, so we’ll, we’ll have a— Speaker 2 [1:09] we’ll— Speaker 3 [1:09] they’ll have a lot to say about the merger, I am sure. Speaker 1 [1:12] So they will talk about it. I, I— that’s, that’s certainly refreshing. I think it’s what our audience wants. We’re going to give them what they want, right? Speaker 2 [1:18] Yes. Speaker 3 [1:18] Oh yes. Yeah, absolutely. Speaker 1 [1:22] I had the chance to interview the head of the STB, the chair of the STB, Patrick Bucks, a couple of days ago related to the virtual symposium. Now, one of my opening questions was, tell me about what your thoughts on the merger was. And he immediately shut me down. He’s like, I can’t talk about that. But it is great. And we’ve got, you know, BN’s gonna be on CSX. We’ve got some of the Canadian railroads. It’s a jam-packed agenda. I’m super pumped about it, Bill. Speaker 2 [1:52] It is. And we have some, some looks at autonomous trains as well, which is, you know, people say that’s going to be the future of growth in the industry. So it’ll be an interesting, interesting conference to look at. We have earnings reports came out last week and this week, uh, from— actually all this week, it’s been a long week, um, for, uh, 4 out of the, uh, 6 Class 1 railroads. Um, and really the results show what happens when you get a little bit of volume growth. Speaker 3 [2:28] Um, you know, all of the railroads reported improved financial results. Uh, some had record revenue. Speaker 2 [2:36] Um, if you look at this chart here, CSX’s volume was up 6%. UP up 2%, NS up 4%, and Canadian National up 5% with an asterisk because that is the way they prefer to count it based on revenue ton miles. Speaker 3 [2:51] If you look at carloads, which makes it— equates it with the other railroads on that chart, uh, volume was relatively flat at 0.35% growth. Speaker 2 [3:01] Um, but, uh, what, what’s important here too is these improving volume outlooks and financial outlooks have prompted 3 of the 4 railroads to raise their financial outlooks for the year and in some cases their volume growth outlooks. And intermodal has primarily been driving that, but it’s also broad-based across most of the merchandise carload sectors. Coal depends on the railroad. Norfolk Southern was up quite a bit. Speaker 3 [3:38] Thanks to exports of metallurgical coal. Union Pacific was down due to high stockpiles at utility plants and also low natural gas prices. Their business is predominantly utility coal. Speaker 2 [3:52] But, you know, you look at the intermodal figures, you know, CSX up 9%, UP was up 4%. But within that, their domestic intermodal set a 4th straight quarterly record for volume. And they had double-digit growth. Norfolk Southern intermodal was up 5%, and they’re seeing strong truck-to-rail conversions, they say, amid the high fuel prices. And the outlier here is CN. As we’ve talked about on Wednesdays, the intermodal market is different in Canada than it is in the US. And one thing that CN’s Chief Commercial Officer Janet Drysdale said on their earnings call this morning was that truck capacity is not as tight in Canada as it is in the US. Speaker 3 [4:42] And that’s been a key factor in driving those domestic volumes up in the US. Speaker 1 [4:48] The regulatory and immigration crackdown is really an American story. And Canada’s got its own situation with immigration issues, but they’re Their orientation on the Canadian truck drivers is quite different than the administration’s orientation. So it certainly makes sense that the Canadian railroads would not be as bullish on intermodal as what you see. Plus you’ve got the whole tariff overhang on this, Bill. Any thoughts there? Speaker 2 [5:17] Yeah, that’s it exactly. Speaker 3 [5:19] And CN said that the key here for them is to be adaptable amid ongoing trade tensions and disputes and tariffs that are levied one day and pulled back the next. Speaker 2 [5:32] Um, and so never-ending story. Speaker 3 [5:36] Exactly. Speaker 2 [5:36] And, um, you know, they’ve talked about metals traffic is, is still moving, uh, across the border, um, despite the tariffs because the US can’t produce enough of, of aluminum, for example. Um, forest products traffic not doing well for CN. Speaker 3 [5:53] Um, that’s partly due to tariffs, partly due to the low uh, you know, the slow housing starts in the US. Speaker 2 [5:59] Um, but, uh, you know, when you look through, um, the railroad’s outlooks, um, for the various traffic segments, um, you know, they really see broad-based, um, positive outlooks. Speaker 3 [6:14] Uh, at CSX, the only thing that was really, uh, negative was, uh, automotive and, and chemicals. And I think that might have more to do with the chemical plants that, that CSX serves. Speaker 2 [6:26] Union Pacific, the only negative thing that they had on their second half volume outlook was, was coal. Um, everything else, uh, was— Speaker 3 [6:35] they viewed in positive territory in their carload business, which is, you know, industrial products, uh, traffic, the ingredients that go into things. Speaker 2 [6:44] Um, they believe that theirs is going to be above the rate of industrial production, which suggests market share gains versus truck. Norfolk Southern said industrial activity is a positive for them as well as global energy prices. And in the intermodal side, the truck market tightening is positive. Speaker 3 [7:06] They were mixed on consumer demand, I think mostly because of the high fuel prices that are affecting everybody at the pump. Speaker 2 [7:16] And coal, they were kind of neutral. CN was really positive on petroleum and chemicals traffic. Speaker 3 [7:22] That’s a huge export story for them as well as internally with a new fuel facility in the Greater Toronto Area. Grain continues to be a bright spot for them. Speaker 2 [7:34] They do believe that their domestic intermodal is gonna grow this year and then automotive traffic as well. Speaker 3 [7:43] They’re down on intermodal, international intermodal, partly because they’ve been demarketing some of the lower margin traffic. Speaker 1 [7:52] Hey Bill. Speaker 2 [7:52] And then, yep. Speaker 1 [7:53] Go ahead, sorry. Speaker 2 [7:55] No, no. And then just forest products and fertilizers, they had a negative outlook on. CPKC, the other Canadian-based railroad, they report on Wednesday. Speaker 3 [8:03] And then BNSF, which is a unit of Berkshire Hathaway, they will report alongside their parent company next month. Speaker 1 [8:09] So this is a big change in direction. Earlier this year, we’ve covered it extensively. The railroads were pretty bearish on this year, or at least not constructive about this was going to be an off year. I think the industrial slowdown that we saw last year probably prepared them to think the worst. The change is that there’s a massive change in tone, just in terms of perception of the improvements in construction in this year that’s taking place across their business. Are they, do they believe this is really driven by higher demand? I know intermodal is a truck fungible story from a capacity standpoint, but what are they seeing on the demand side, particularly in the economic, the economy? Speaker 2 [8:51] Norfolk Southern pointed to industrial development efforts and how new plants and plant expansions are coming online in a variety of sectors across their network. I believe they said it was double, uh, what it was last year. It’s a similar story at CSX. So they are seeing that industrial economy, uh, pick up and, and gain steam. Speaker 3 [9:14] CSX also pointed to construction around data centers as driving, uh, some of their construction-related traffic increases as well. Um, and, um, Union Pacific had similar things to say about the industrial economy and manufacturing. Speaker 2 [9:29] Um, so I think they were cautious, uh, earlier, earlier on this year because of, um, the length of the freight recession and saying, oh, we see the turnaround, you know, next year or the second half of the year, and then it just not playing out. Speaker 1 [9:48] The industrial, the industrial economy was a dog last year. We see it in the freight data. It just was absolutely anemic, but it has come back since November, and that’s certainly given everyone— but I think Like many of the trucking companies in the first quarter when there was earnings reports, they were constructive, but still cautious. As we like to say in freight, nobody gets credit when you’re a public company for being wrong. In terms of if things are bad, you’re going to get spanked by the markets. If you are overconfident, and that’s why a lot of the public CEOs, particularly the seasoned ones, tend to be more conservative when they’re talking about market developments. It’s interesting, because We talked to a lot of those folks. They’re more bullish when they’re one-on-one than they tend to be with Wall Street when they’re talking about the market, because they have to be very careful to set themselves up for failure. Speaker 3 [10:36] That’s it exactly. It’s way better to under-promise and over-deliver than the other way around. Speaker 1 [10:41] The opposite, you get absolutely obliterated if you’re on the wrong side of that, if you’ve over-promised. As anybody who’s been public knows that that’s a dangerous thing. So Bill, I want to talk about the merger for a second, because it’s obviously the most important story. We have just a number of big announcements this week. You covered the whole story where CN was given— can you explain for those that aren’t real deep into the rail market, why is this a significant development? Speaker 2 [11:10] Well, a couple of things. First, railroading is all about the map. It’s not the highway network. You can’t just go anywhere. Speaker 3 [11:16] You can only go as far as your map gets you. Speaker 2 [11:20] And there were 2 deals that Union Pacific and Canadian National worked out. Speaker 3 [11:25] One is totally tied to the merger and the other never would have happened without merger discussions. Speaker 2 [11:31] So the first is, and this is not dependent on the merger, Canadian National gets a haulage rights agreement between Memphis and the Mexican border at Eagle Pass, Texas, over Union Pacific. So in other words, Union Pacific will haul CN’s traffic from Memphis to Eagle Pass. That enables CN to be a better competitor against CPKC, which can offer single-line service between Canada, the US, and Mexico. This, uh, CN deal applies only to Canadian origins and destinations traffic moving to and from Mexico, um, but it’s a faster route and is, and is far superior to, uh, the existing offerings. Speaker 3 [12:14] They currently hand off traffic to Union Pacific in Chicago, so they get a longer length of haul out of this. Speaker 2 [12:21] In exchange, Union Pacific, uh, gets rights to run over CN’s Chicago bypass. Back in 2009, they, they bought a railroad called the EJ&E, which basically is, is kind of like a loop road around Chicago, doesn’t go through it. Speaker 3 [12:39] And Chicago, of course, is congested, notoriously so at times. Speaker 2 [12:44] And, and it’s inconsistent and long, uh, the transit times through Chicago. Speaker 3 [12:50] CEO Jim Vena said at times when he was at CN, they could get a train faster from British Columbia to Chicago than it took to get from one side of town to the other. Speaker 2 [13:00] That’s an extreme example, but you Union Pacific will get this much faster route through Chicago as a result of this. And they want to— Speaker 3 [13:11] once they put the finishing details on this and reach a final agreement, it’s not contingent on the merger, and they want to start moving this traffic as soon as they can. Speaker 2 [13:21] The part that’s related directly to the merger involves giving CN access to customers, uh, in basically in, in the Midwest. Speaker 3 [13:33] There’s only a handful of them that under this merger, since there’s no overlap, would go from the option of having 2 Class 1 railroads serve them and have seen it just go to one. And it’s the same for customers that currently have the option of 3 railroads going down. Speaker 1 [13:48] Was this just a way of, for those customers that have dependencies, to demonstrate to the STB that they’re trying to find ways to provide some competition? Speaker 3 [13:57] Yes. And Union Pacific and Norfolk Southern were upfront about this when they filed their merger application. They knew that they were going to have to provide access to enhance competition in that overlapping area in the Midwest, which is primarily in Missouri. Speaker 2 [14:15] And so CN will get access. Speaker 1 [14:17] Is it chemicals? Like, what is the— what are the commodities that are impacted? Speaker 2 [14:21] It’s a variety of carload shippers. Speaker 3 [14:23] That specific question did get asked on CN’s earnings call today, and they didn’t really answer it. Speaker 2 [14:29] Um, it’s— Speaker 3 [14:30] it— but we’re, we’re talking 5, 5 shippers who see their option go from 2 to 1, and it, it’s 2 dozen perhaps who see their options go from 3 to 2, and most of those are in the St. Louis area. Um, so it’s a range of carload commodities and ag, given, you know, the location in Missouri. Um, and, and, um, CN will, uh, get at trackage rights over Union Pacific, which would have, uh, basically 2 parallel routes across Missouri. CN will use one, and they gain access to the Kansas City market for the first time, uh, on their own tracks or with their own trains, controlling their own destiny. And they get to use Union Pacific’s, uh, yard, uh, that is really not used very much today, Neff Yard in Kansas City. Speaker 2 [15:21] So in exchange for all this, CN said, hey, this solves our competitive concerns about the merger. We get growth opportunities out of it, and as a result, we will not oppose the merger. Speaker 1 [15:37] Well, Bill, I’m so excited to see you next week. We have the National Model Railroad Association’s convention, their annual convention will be here in Chattanooga. So for those that are interested in model railroads or in trains, it’s the perfect week to be here in Chattanooga to talk about that. And so So much is happening in the railroads. We have the right people coming to the virtual event. It’s a bang-up lineup, by the way. The post Unpacking Rail Earnings: How Volume Growth Fuels Merger Talks appeared first on FreightWaves.

Make better investment decisions with Simply Wall St's easy, visual tools that give you a competitive edge. Canadian National Railway (TSX:CNR) is in the spotlight after reporting second quarter 2026 results, affirming its next dividend, updating its share buyback activity, and announcing a new freight corridor agreement. See our latest analysis for Canadian National Railway. The recent earnings beat, dividend affirmation, and progress on the Union Pacific freight corridor have come alongside firm share price momentum, with a 30 day share price return of 6.57% and year to date share price return of 32.27%. The 1 year total shareholder return of 43.20% points to gains that include both price and dividends. If Canadian National Railway has you thinking about transport and infrastructure themes, it can also be useful to see what else is moving in related areas, including 35 power grid technology and infrastructure stocks After Canadian National Railway’s strong run and recent earnings beat, the decision now is whether that momentum justifies paying today’s price, or whether it makes more sense to wait for a pullback before committing fresh cash. Canadian National Railway’s most followed narrative places fair value at about CA$177.79, slightly below the last close of CA$182.24. This tightens the margin for error and puts more weight on the earnings path implied by that estimate. Read the complete narrative. Want to see what this narrative is really baking in? The future revenue curve, margin profile, and exit multiple all matter here. The balance between earnings growth, buybacks, and the required discount rate could surprise you. The full story joins those moving parts into one fair value number. Result: Fair Value of CA$177.79 (OVERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, Canadian National Railway still faces volume and pricing risks, as well as currency swings, that could challenge the revenue growth and margin assumptions in this narrative. Find out about the key risks to this Canadian National Railway narrative. The analyst narrative suggests Canadian National Railway is about 2.5% overvalued at CA$182.24 versus a fair value of CA$177.79. Yet on simple earnings multiples, the picture looks more forgiving. CNR trades on a P/E of roughly 23x, below peer and industry averages, which lowers valuation risk for anyone who thinks the market could eventually lean closer to its 24.1x fair ratio. Is the modest premium to fair value enough to matter if earnings continue to track analyst assumptions? See what the numbers say about this price — find out in our valuation breakdown. Does the mix of optimism and caution around Canadian National Railway match your own read of the numbers, or do you see something different? Take a moment to weigh the potential upside against the flagged risks, then review the 5 key rewards and 1 important warning sign If Canadian National Railway has sharpened your investing focus, do not stop here. Use a few minutes now to scan other opportunities that could fit your goals. Target dependable income streams by reviewing companies in the 6 dividend fortresses and see which high yield payers line up with your risk comfort. Hunt for potential future standouts by checking the screener containing 10 high quality undiscovered gems that combine solid fundamentals with less crowded investor attention. Prioritise resilience and sleep easier at night by focusing on the 9 resilient stocks with low risk scores that score well on stability and downside protection. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include CNR.TO. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Canadian National Railway Company (CNI) reported second-quarter 2026 adjusted earnings of $1.50 per share (C$2.08), beating the Zacks Consensus Estimate of $1.39 by 7.9%. Adjusted earnings increased 11.2% year over year in Canadian-dollar terms. Revenues of $3.43 billion (C$4.75 billion) topped the consensus estimate by 5.4% and rose 11.2% year over year. Strong grain and energy volumes supported the performance, while revenue ton-miles, a measure of freight volume, increased 5.1%. Canadian National Railway Company price-consensus-eps-surprise-chart | Canadian National Railway Company Quote Freight revenues increased 11.5% year over year to C$4.56 billion. Grain and fertilizers revenues climbed 17.5% year over year, while petroleum and chemicals rose 16.5%. Automotive revenues increased 18.3% year over year, aided by strong imports to Canada and market-share gains. On a year-over-year basis, intermodal revenues advanced 7.8%, forest products increased 7.4%, and metals and minerals rose 6.5%. Coal revenues were nearly flat. Total carloads slipped 0.4%, but freight revenue per carload increased 11.9% year over year to C$3,236, reflecting improved volume mix and yield. Operating expenses increased 12.8% year over year to C$2.97 billion. Fuel expense surged 59.6% year over year to C$659 million due to higher prices, although stronger fuel efficiency and higher volumes partly tempered the impact. Purchased services and material costs rose 11.3% year over year, while labor and fringe benefits increased 3.1%. Operating income grew 8.7% year over year to C$1.78 billion. However, the adjusted operating ratio deteriorated 50 basis points to 62.2%, as fuel alone had a 210-basis-point unfavorable impact. The adjusted result excluded C$17 million of advisory costs related to rail consolidation matters. Gross ton-miles increased 3.2% year over year, while gross ton-miles per average employee improved 8.8%. Locomotive utilization rose 6.3% year over year, and train length increased 0.8%. These gains reflected resource alignment, plan discipline and continued emphasis on asset utilization. Network service measures were mixed. Car velocity declined 0.9% year over year to 211 miles per day, and through dwell increased 4.4% to 7.1 hours. Through network train speed improved 1.1% to 19.1 miles per hour, while the local service commitment rate declined to 93% from 95%. Net cash provided by operating activities totaled C$1.61 billion, down 7.7% year over year. Lower investing outflows helped free cash flow increase 2.2% to C$942 million. Gross property additions declined 13.7% to C$695 million. CNI ended June with C$280 million in cash and cash equivalents compared with C$350 million at 2025-end. Long-term debt increased to C$21.74 billion from C$20.30 billion. The company repurchased 2.9 million shares for C$454 million during the quarter. Management expects Canadian grain strength in the third quarter due to higher carry-outs from the record 2025-2026 crop. Petroleum and chemicals should benefit from refined-product growth, new crude oil business and added natural gas liquids fractionation capacity. The outlook is less favorable for international intermodal, where North American imports remain challenging, and lower-profitability volume has been demarketed. Forest products face flat housing starts and U.S. tariffs and duties, while weak iron ore fundamentals remain a drag on metals and minerals. Canadian National now expects low-single-digit RTM growth in 2026, up from its prior assumption of flattish growth. The company raised its adjusted diluted earnings growth outlook to the mid-to-high-single-digit range from its earlier expectation for growth slightly above RTM gains. The railroad continues to plan approximately C$2.8 billion of capital expenditures, net of customer reimbursements. Its updated assumptions include a Canadian dollar value of 71 U.S. cents and West Texas Intermediate crude prices of $80-$110 per barrel. Management also flagged heightened demand risk from volatile macroeconomic conditions, geopolitical conflicts and global trade tensions. Currently, CNI carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Delta Air Lines (DAL) reported second-quarter 2026 earnings (excluding 88 cents from non-recurring items) of $1.56 per share, beating the Zacks Consensus Estimate of $1.51. Earnings declined in double digits (% wise) from a year ago as sharply higher fuel costs pressured profitability. Revenues rose on a year-over-year basis to $17.67 billion but missed the consensus estimate of $17.76 billion. Broad demand strength lifted adjusted total revenue per available seat mile, or TRASM, 12.4%, while premium and diversified revenue streams continued to expand. United Airlines Holdings, Inc. (UAL) reported second-quarter 2026 adjusted earnings of $1.99 per share, down 48.6% year over year but above the Zacks Consensus Estimate of $1.92 by 3.7%. Operating revenues rose 16% to $17.67 billion and were essentially in line with the $17.68-billion consensus mark. A 12.1% increase in total revenue per available seat mile, or TRASM, and broad-based gains across premium, loyalty and cargo revenues supported the top line despite sharply higher fuel costs. J.B. Hunt Transport Services, Inc. (JBHT) reported second-quarter 2026 earnings of $1.91 per share, up 45.8% from $1.31 a year ago. The figure beat the Zacks Consensus Estimate of $1.71 by 11.7%. Operating revenues climbed 19.4% year over year to $3.50 billion and surpassed the consensus mark of $3.19 billion by 9.5%. Higher volumes and pricing across several businesses supported growth, led by a 10% increase in Intermodal loads. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Canadian National Railway Company (CNI) : Free Stock Analysis Report Delta Air Lines, Inc. (DAL) : Free Stock Analysis Report United Airlines Holdings Inc (UAL) : Free Stock Analysis Report J.B. Hunt Transport Services, Inc. (JBHT) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Image source: The Motley Fool. Friday, July 24, 2026 at 8:30 a.m. ET Vice President of Investor Relations and Special Projects - Jamie Lockwood President and Chief Executive Officer - Tracy Robinson Chief Operations Officer - Pat Whitehead Chief Commercial Officer - Janet Drysdale Chief Financial Officer - Ghislain Houle Operator: Good morning. My name is Krista, and I will be your conference operator today. I would like to welcome everyone to the Canadian National Railway Second Quarter 2026 Financial Results Conference Call. At this time, I would like to turn the call over to Jamie Lockwood, CN's Vice President of Investor Relations and Special Projects. Ladies and gentlemen, Mr. Lockwood. Jamie Lockwood: Thank you, Krista. [Foreign Language] Welcome, everyone. Thank you for joining us for CN's Second Quarter 2026 Financial and Operating Results Conference Call. Joining us today on the call are Tracy Robinson, our President and CEO; Pat Whitehead, our Chief Operations Officer; Janet Drysdale, our Chief Commercial Officer; and Ghislain Houle, our Chief Financial Officer. You can turn to Page 2 of the presentation, which includes our forward-looking statements and non-GAAP definitions for your reference. These forward-looking statements reflect our current information and educated assumptions and include estimates, goals and expectations about the future. These involve risks and uncertainties, and actual results may differ from what we expect. As a reminder, forward-looking statements are not guarantees and factors such as economic conditions, competition, fuel prices and regulatory changes could impact actual outcomes. It is now my pleasure to turn the call over to CN's President and Chief Executive Officer, Tracy Robinson. Tracy Robinson: [Foreign Language] Thanks, everyone, for joining our call. I'm pleased to walk you through our second quarter results and some recent developments. This team has delivered another quarter of strong performance. EPS growth of 12%, FX adjusted on 5% volume growth. We're staying focused on what we control and this is driving results. And we're running the railroad well using service to convert customer growth opportunities, driving cost and capital discipline and continuing to position CN for growth. With this momentum, we are raising our guidance and now expect earnings for the year of mid- to high single digits on the back of low single-digit volumes. The engine is running well. We're executing against our strategy, and we can see the results. Our productivity continues to improve while we're supporting a customer growth across our franchise and at the same time, running a safe, fluid, efficient and reliable railroad. And we're seeing this in fuel efficiency where we delivered record performance in the first half of the year, in labor productivity, where we're moving more volumes with less people and in locomotive productivity. Now our team is always challenging itself to use the assets we already have more efficiently. On the commercial side, our teams are focused on winning business and converting opportunities into growth. Now whether it's metals moving within Canada, energy-related traffic, domestic intermodal or other areas across the portfolio, we are seeing benefits of stronger commercial intensity and a team that is focused on creating value for our customers. It's all about speed and agility. Simply put, with strong service, disciplined operations and commercial intensity come together, results follow. And that's exactly what we've seen in the first half of the year. Now before I turn the call over to the team to walk you through the quarter in more detail, I'd like to spend a moment on the two agreements with Union Pacific that we announced this past Wednesday. Now these were rigorous negotiations. But Union Pacific runs a great railroad, and they're good partners, and I'm happy where these discussions have landed for both of us. These agreements are strategic and they bring long-term benefits. Now for CN, they structurally enhance and extend our network by giving us direct and very competitive access to important markets in Kansas City and Mexico. They will also increase the density in parts of our U.S. network where we have capacity. Now the first is a commercial agreement that extends our reach into Mexico. It grants CN new rights for volumes between Canada and Mexico via Memphis. This gives us the competitively advantaged growth and extends our length of haul from Chicago to Memphis, densifying our Southern network. In exchange for the Mexico route, we've granted UP rights to additional capacity over the EJ&E for U.S. traffic. This monetizes available surplus capacity on J while protecting the capacity that CN needs now and into the future. Any additional capacity required to accommodate UP volumes will be funded by them. Now these provisions will be effective as soon as the definitive agreement is in place and are not contingent on the merger. The second is a settlement agreement, and it is contingent on the STB's approval and closing of the merger. It secures for us competitive access to the Kansas City and the use of UP's Neff Yard. This positions us to compete on new business in an important rail market and provides the opportunity to lengthen our haul and traffic currently moving in this quarter. We've also secured remedy protections allowing us to provide competitive options for the 2-to-1 and 3-to-2 customers, an agreement that provisions granted to others through the STB process will also be extended to us. Now through this strategic agreement, we have largely addressed the risk of the proposed merger to CN, and we have created new opportunities for us to grow, and we've agreed to not oppose the merger. Overall, the opportunities created through the new strategic commercial agreement with UP and the potential merger-related remedy, improve the position of our railway and create new avenues for growth. These agreements reflect how we operate, staying close to the opportunities in front of us and acting with discipline to create long-term value for our customers and shareholders. CN is very favorably positioned in the long term. We can see the impact of our actions in 2026. But what's more exciting to me is the opportunity that is unfolding across 2027 and beyond, supported by unique long-term tailwinds in our economic exposure and a team that is showing can drive results through cycles. So I want to thank our railroaders across the network for their commitment and execution this quarter. Their efforts continue to make the difference. Now let me pass it to the team who'll give you more details on the quarter. Pat, over to you. Patrick Whitehead: Thank you, Tracy. We entered the quarter with a clear plan centered on fluidity, reliability and productivity. The team executed that plan and the results are showing up throughout the network. I am pleased with our performance, and I want to thank the entire CN team. As always, it starts with safety. Everything we accomplished starts with our people going home safely at the end of the day. Safety is foundational to our performance, our culture and the way we operate this railroad. While we are encouraged by the progress we made over the last few years, we are never satisfied as we always look for continuous improvement. This year, we have seen a very active wildfire season in both Northern Ontario and British Columbia. The safety of our employees and of the communities we operate through is our first area of focus. We are monitoring the wildfires closely, both for our own operations and for our customers' operations, and we continue to work closely with local authorities. We have a comprehensive extreme weather fire risk mitigation plan to reduce risk and increase prevention, monitoring and response to wildfires with our firefighting fleet deployed in strategic locations. Our mainline through Northern Ontario is open at this point, and we currently do not expect a significant impact to our business. Now turning to operations. Productivity improvements continue to be strong. We moved 3% more gross ton miles using existing assets and capacity more efficiently. We improved crew utilization. We ran longer trains and reduced nonvalue-added activities. Locomotive productivity improved approximately 6% in the quarter. Employee productivity improved approximately 9%. If you look only at train and engine employees, productivity improved approximately 13%. And our train length increased approximately 1%. These are important proof points because productivity is not just an operating statistic. Those improvements translate directly into our -- into stronger financial results and the gains we are delivering are structural and enduring, supporting value creation well beyond the quarter. Another example is fuel efficiency, where CN is already leading the industry and continues to improve. We delivered the best Q2 and first half fuel efficiency performance in our history, driving direct operating savings. The team continues to identify opportunities through train handling, locomotive utilization, and operating practices that reduce consumption, while maintaining transit time performance. Now let me provide an update on Fast Track, our cross-functional efforts focused on continuous improvement throughout the network. It is about challenging how we work, eliminating waste, improving terminal productivity and making the railroad more efficient. We have essentially completed the review across the initial list of major terminals. We continue to work across intermodal terminals and our network operation centers, while performing a look-back process of the completed terminals. So far this year, we have close to $100 million in realized benefits. Importantly, these improvements have been achieved while maintaining strong service performance. Fast Track is a part of how we operate this railroad. The mindset is continuous improvement, and we believe there are additional opportunities ahead as the work continues. Turning to the next slide. The network is running well. Car velocity and network train speed were largely flat year-over-year, while handling stronger volumes and maintaining solid customer service. And these metrics as well as dwell improved during the quarter after still being impacted by the tail end of winter in April. We are seeing strong first and last mile execution and the type of operating performance that creates opportunities for Janet and her team to win additional business. Let me spend a moment on the Western region because it is a good proof point of what this network is capable of doing. The West handled record grain volumes during the quarter as well as higher year-over-year refined petroleum products, potash, NGLs and other commodities. At the same time, car velocity, train speed and dwell improved roughly 3%. That combination matters. It demonstrates that the capacity investments we have made, disciplined train planning and strong execution are allowing us to absorb growth while improving overall fluidity, moving more freight with solid service and improving asset utilization. The team has done a solid job this quarter, and I'm proud of the progress we've made. The railroad is performing well. The productivity initiatives are gaining traction. The benefits from Fast Track are becoming increasingly visible. We are pleased with the progress and just like safety performance, we're never satisfied. Lastly, our team is excited around the new opportunities announced in the MOUs with Union Pacific. I'm working closely with Eric and the Union Pacific team to operationalize the agreement. Together, we are hammering out details on the connections between our two railroads. With that, I'll turn it over to Janet. Janet Drysdale: Thanks, Pat, and good morning, everyone. As you've just heard, the railroad is running really well, and that's translating into strong service for our customers. Revenues were up 11% year-over-year on 5% RTM growth. The close alignment between operations and sales and our strong service levels are driving success across the network. Underpinning that is how effectively we are working with our customers. Let me give you a few quick examples. Our metals volumes were up 11% in the second quarter despite the significant tariffs on steel and aluminum as we work with our customers to create new supply chain. We improved our commercial speed and agility to capitalize on market changes, converting spot opportunities in a number of segments, including butane and plastics. And we continue to collaborate for longer-term growth. Our partnership with Keyera and AltaGas is a great example of how we're working strategically with our customers to efficiently get their products to global markets. Our broad boots-on-the-ground effort also continues, building on the momentum we established over the last few quarters and across a range of commodities. Same-store pricing remains ahead of our rail cost inflation. However, in the quarter, it was partly offset by mix. Let me walk you through the key second quarter highlights. We delivered another exceptional quarter in grain, continuing to set records for volumes of Western Canadian grain and our U.S. grain performance was strong across the board, corn, soybeans and ethanol. We also delivered a record second quarter for potash shipments with solid service enabling us to capitalize on strong demand, both domestic and exports. Petroleum & Chemicals RTMs were up 11%. In refined products, we increased long-haul shipments from Western to Eastern Canada, and we continue to grow our volumes into the GTA fuel terminal, growing RTMs in this segment by nearly 30%. We grew NGL RTMs by over 15%, demonstrating the value of our Prince Rupert export supply chain as well as the team's ability to convert on a number of spot butane opportunities. Domestic Intermodal outperformed with solid growth inter Canada. In overseas intermodal, volumes were up sequentially, but lower year-over-year, reflecting tough comps due to last year's pull forward of volumes on tariff uncertainty. In automotive, growth reflected share gains as well as a shift in traffic flows toward longer haul movements driving the stronger RTM versus carload performance. In metals and minerals, I have to say the team has done an outstanding job working with our customers to mitigate the impact of the tariffs, growing domestic and cross-border scrap shipments and shifting steel towards longer-haul domestic Canadian lanes. We had a notable mix and -- mix shift in frac sand with less long-haul shipments into Alberta and an increase in shorter haul shipments within the U.S. In Forest Products, we increased our shipments in packaging products and helped our customers to diversify their export markets for wood pulp. Lumber shipments also increased this quarter, some of which is an easier year-over-year comp, and there is likely some pull forward there. Coal RTMs were flat for the quarter as increased U.S. thermal coal exports were offset by production challenges affecting Canadian West Coast volumes. Moving now to Slide 10 and turning to the second half of the year. We expect strength in grain to be the key driver of RTM growth in the third quarter. Q4 year-over-year comparables for grain will be more challenging, though, as we lap the record crop and CN's record performance. Our energy franchise continues to be a real bright spot. We expect ongoing strength in refined products, new crude business and additional fractionation capacity supporting long-term growth in NGL exports via Prince Rupert. Domestic Intermodal is expected to remain strong, reflecting sustained momentum from recent gains. Overseas Intermodal is expected to be weak in the second half, in part related to the demarketing of certain low profitability shipments through the Port of Vancouver. In automotive, share gains and strong offshore imports into Canada are offsetting overall flat production. In Metals & Minerals, we see a steady run rate for steel and aluminum and growth in frac sand shipments to Northeast BC, partly offset by lower iron ore. In forest products, while no sign yet that housing starts will improve. With respect to coal, demand remains supportive for U.S. exports, Canadian coal shipments will depend on mine level production and operational conditions. Now a quick word on the commercial agreements that we've reached with UP. The team is very excited about the opportunity to extend our length of haul, and we're even more excited that we've secured for the long term, a shorter and faster route to Mexico and direct access to Ferromex. For sure, more to come on that. So putting all of that together, our strategy is delivering. We are growing volumes that we can service well and maintaining our pricing discipline. And looking beyond 2026, we remain excited about the multiyear, multi-commodity growth prospects across our franchise, especially in energy and ag and with our new connection to Mexico. And I am confident in and very proud of the commercial team's continued commitment to find new opportunities and to capture the volumes that best fit our network. They are staying close to our customers and moving with urgency and agility. We're also working closely with our short line partners who are driving economy plus growth, continuing to leverage our business and industrial development team to attract new facilities onto rail and facilitate expansion and we're staying very close to the opportunities being created by Canada's trade diversification agenda. CN's network is uniquely situated to connect new sources of resource production with domestic and global markets. And with the capacity and network investments already in place, CN is well positioned to deliver on that growth at low incremental cost. Ghislain, over to you. Ghislain Houle: [Foreign Language] I'll begin with a review of our second quarter performance before turning to our updated outlook for the balance of the year. Starting on Slide 12, our results came in ahead of our initial expectations and reflect the strong operational and commercial execution highlighted by Pat and Janet. Second quarter reported diluted EPS was $2.06, up 10% from last year, while adjusted diluted EPS was $2.08, up 11% from last year or $2.09, 12% higher on an exchange adjusted basis. These results reflect an adjustment of $17 million in advisor fees related to industry consolidation. As Tracy mentioned, the engine is running well. Our network is fluid. Our service is reliable, and we're converting volume growth to the bottom line. The solid performance from Pat and the operating team allowed us to deliver an adjusted operating ratio of 62.2%, a 50 basis point increase versus last year's operating ratio of 61.7% impacted by higher year-over-year fuel prices in the quarter, which had a diluted impact on the operating ratio of 210 basis points. Year-to-date, free cash flow is up approximately 20% or roughly $300 million driven by stronger earnings, disciplined capital spending and continued attention on working capital partially offset by higher required tax payments. Leverage at the end of Q2 was 2.6x, and we will continue to be opportunistic on our current share buyback program. We continue to maintain a 2.7x adjusted debt to adjusted EBITDA target for 2026. Turning to Slide 13. Let me walk you through a few key operating expense categories for the quarter on an exchange-adjusted basis. Labor was 3% higher driven by general wage increases and approximately $40 million increase in year-over-year incentive compensation which were partially offset by 5% lower average headcount and strong labor productivity. Fuel expense was about $250 million higher than in the same period last year due to higher fuel prices with the impact of higher volumes offset by record fuel efficiency. With a sharp increase in oil prices in March and the decrease in oil prices in June, fuel did not impact EPS in the quarter. However, as noted, it had a 210 basis point unfavorable impact to the operating ratio. Purchase services and material was up 11%, driven by advisory costs higher trucking and vessel costs, mostly due to stronger volumes. Other expenses were largely flat year-over-year. Moving to Slide 14, let me provide some visibility into 2026. The strong execution of our team, combined with stronger volumes through the first half, gives us increased confidence in the year. As a result, we are raising our full year outlook. As Tracy mentioned, we now assume low single-digit RTM growth for 2026 versus our original assumption of flattish volumes for the year. So we now expect mid- to high single-digit adjusted diluted EPS growth for the year. Our updated outlook assumes a constructive demand environment in the second half of the year with year-over-year comparisons becoming more challenging, particularly as we move into the fourth quarter. We continue to see uncertainty related to fuel and foreign exchange and broader macroeconomic volatility remains present, including potential changes in trade and policy discussions. We are encouraged by the momentum we are seeing year-to-date and remain grounded in our assumptions for the balance of the year. Accordingly, we continue to assume that WTI will be in the range of USD 80 to USD 110 per barrel. However, we have updated our FX assumption from $0.73 to the current spot rate of $0.71 for the balance of the year. Our effective tax rate continues to be in the range of 25% to 26%. To wrap up, we are pleased with our performance in the quarter and first half. The team has executed well, volumes have trended ahead of our expectations. Free cash flow remains strong, and the network is demonstrating the earnings leverage we've been working to build. Let me pass it back to Tracy. Tracy Robinson: Thanks, Ghis. Thank you all. Now as you can tell, we've got great momentum, and we're excited about the future. And with that, Krista, we're ready to take questions. Operator: Your first question comes from Walter Spracklin with RBC Capital Markets. Walter Spracklin: Congratulations on a good quarter here. I was wondering if you could go into the MOU, look at the and give us an indication of the total addressable market that you're looking at in that -- on that route. In particular, what markets do you -- are you planning on focusing on? And more importantly, how can -- how are you planning to assess -- and how will you be communicating the assessment of how well you're doing in terms of ramping up any new customer wins or volume that you're getting on that -- on those -- on that new route? Tracy Robinson: Walter, listen, thanks for the question. There's two agreements, as you know, the first agreement -- the commercial one. And that will start as soon as we get the definitive agreement in place. And so we will have immediate access directly to Ferromex in Mexico through the Memphis Gateway. And so it does a couple of things for us, for volumes that are already moving that extends our haul from what is essentially Chicago down to Memphis, which is a benefit but it also allows us to more directly market with FXE in Mexico for southbound volumes and northbound volumes. So we will be going after all markets including those that are moving on rail right now as well as what we all know is a pretty expansive truck market between Mexico and Canada. I think it's in the area of $3 billion. So we're getting organized on what that push is going to look like. What this does is gives that market another competitive option. We know those that have gone after the truck-to-rail conversion, most haven't met the targets that they put in place. This is tough, but we're going to -- we've got a great corridor here, an advantaged corridor. We're going to put a shoulder into it and we're putting those plans in place right now. The other agreement, of course, gives us access into Kansas City, which is another great marketplace, but we don't get that, of course, that one is contingent upon the merger being successful and being put in place. And so that will be in the future, we don't have access to that market right now. Operator: Your next question comes from the line of Cherilyn Radbourne with TD Cowen. Cherilyn Radbourne: I wanted to use my one to ask Janet, if she could give some more color on the year-to-date growth of the energy business. Anything you can share about expected growth next year and the extent to which visibility to 2027 and beyond has improved given the events over the last 6 months. Janet Drysdale: Thanks, Cherilyn. I appreciate the question. I think what we're seeing is a lot of strength in the refined products. So that's mainly gasoline and diesel. And of course, that's associated with our new GTA fuel terminal. We did start ramping up Phase 2 of that terminal, roughly in April of this year. So certainly, we are seeing those volumes continue to grow, and we'll have some full year effect of that benefit as well in 2027. But that's a really solid piece of the market, I think, that we've captured here in Ontario, and it's going to continue to grow, but maybe more slowly than the initial ramp-up phase. On the NGLs, of course, we have expansion continuing at the Port of Prince Rupert. And we have the backup of the product that's being drilled and made available, including through the new fractionation capacity that I mentioned that will be coming online in the second half year. So I think -- when we think about the energy franchise, this is a multi-commodity within energy, multi-commodity as well as a multiyear opportunity. And of course, I continue to make reference to the agreement that we've struck in regards to the ACE Terminal. So that's something that we're going to see probably in the 2028 or so time frame. So a great growth story on energy. Operator: Your next question comes from the line of Ken Hoexter with Bank of America. Ken Hoexter: So maybe just continuing on some yield thoughts, right, up 6% in the quarter on revenue per RTM. Maybe just break down fuel and thoughts on core underlying pricing and thoughts into the second half. And -- and I think I heard Pat toss in, there's no impact to the wildfire to results. I just want to make sure I heard that. And then given you don't oppose the merger, do you see that as raising the odds of getting it past the finish line? Tracy Robinson: Ken, that's a lot of questions in one question. Let me see if I can start this. So Janet, do you want to say a couple on pricing and then, Ghis on the fuel impact, if you could reiterate it. And then I think, Pat, you've pretty much covered wildfires, I'll close on it. Janet Drysdale: So Ken, I mean, kind of simple terms, we continue to price ahead of our rail cost inflation. For sure, the fuel was a benefit to us as it was to all of the industry in the quarter, bumping up the revenue per RTM revenue per carload. We did have by segment, some changes in haul that also would have factored into some of those changes. I expect that pattern to continue certainly into the third quarter. But the underlying point I want to make is the pricing ahead of our rail cost inflation. Ghislain Houle: Okay. Maybe just, Ken, some visibility on fuel. As I said in my opening remarks. Fuel in the second quarter did not have any impact on EPS. But did have a dilutive impact on OR by 210 basis points. Fuel moves, as you know, a lot day in, day out. If fuel prices remain where they are and the correlation between OHD and WTI remains essentially where it is. Then we think that fuel in the third quarter could be a tailwind by close to $0.15 and a tailwind of about 100 basis points in the third quarter. And then in the fourth quarter, would be a little less would be a tailwind of around $0.10 and a tailwind on OR of about 30 basis points. Tracy Robinson: And Pat, wildfires? Patrick Whitehead: So we are monitoring wildfires in Northern Ontario and in British Columbia. We are operational in both locations and minimal impact to the railroad as far as it relates to infrastructure. We did see some bunching clearly of traffic as we shut down in Northern Ontario and continue to work our way through that. So minimal impact. Tracy Robinson: And as far as the -- our agreement on the merger, the settlement agreement, Ken, the -- as we thought about this, as you know, we've been pro-competition. And we've been talking a lot about the need for more competition. And we had some concerns around how the merger would impact, our network, our business, our customers. And so as we've come to this agreement, we are satisfied that we've mitigated much of that concern. But we've also created the opportunity that we've always said we wanted to do, which was extend our reach into broader markets. And we'done that with the Kansas City extension with the 2-to-1 and 3-to-2. And so this is largely taking care of what are our concerns. Now the merger is broader, and I know that it will go through what I expect will be a very thoughtful and rigorous process by the STB. They'll do a great job of that. And we'll watch that play out starting with what I heard Jim say yesterday was the submission of the next level of materials next week. Operator: Your next question comes from the line of Fadi Chamoun with BMO Capital Markets. Fadi Chamoun: I want to circle back first just a follow-up on some of these question on the MOUs. Can you talk about how many 2-to-1, 3-to-2 customers, you're going to be having access to, provided this whole MOU kind of go through? And on the first agreement in terms of getting that overhead rights to Eagle Pass. Is this for Canadian originated carload only? It just feels like some of the press releases were focused on this being kind of covering only Canadian originated carload. I just want to clarify that. And my main question is maybe to Pat. How are you thinking about the network capacity as we start looking into 2027? I think you guys did a good job this year in improving cash flow conversion, I just want to understand whether we have a CapEx need as we go into 2027. How do you think about the bottlenecks, the capacity to handle the volume as we go into next year? Tracy Robinson: Let me start with that, Fadi. Thanks. And I'll turn it over to Pat first on the capacity piece, but let me tell you what I've been impressed about what he's been able to do. We went through an investment cycle, as you know, where we got our locomotive fleet and our fleets in the right place, and we lifted our capacity in the Edson Sub by 25%. And so we were prepared for all the volume, whether it was the grain or the energy products that have been strong in the second quarter. But what has impressed me so much is that we moved that grain largely without incremental fleet. So we improved our cycle times on grain by 15%. So these guys are not being idled there pushing from an asset perspective. And from a people perspective, we're pushing pretty hard on what we get for every inch of asset base. I would expect he's going to tell you that we've got the capacity to do a whole lot more. But Pat, over to you, and I'll answer his other questions. Patrick Whitehead: Okay. Thanks, Tracy. Yes, I would say that from a network capacity perspective, I feel really good about where we are. I would say if you look back to the presentation and to my comments, what we demonstrated in the West is with volumes surging the capacity that we spent over the last 3 investment cycles, as Tracy pointed out. We demonstrated that we can take on that volume. And in fact, we got faster. We got more fluid with that capacity. We said it before, we have additional capacity available both in the East and in the South, and we continue to work towards growing into those. We think that this expansion of this agreement with Union Pacific will help us fill up some of that capacity in the South, while protecting our capacity and any additional capacity for UP would be funded by UP. I will say to the question of investments, we will continue to spend on basic capital to keep the railroad safe and fluid and call out the 2 projects we continue to point to as far as larger capital projects, which is in Northern and Southern BC, both Zanardi Bridge outside of Rupert and outside of the Vancouver terminal, the Glen Valley and Abrahamson, double-track project. Those are the big call-outs on growth capacity. Tracy Robinson: As to the settlement agreement, Fadi, on the 2-to-1s, I think that we've identified 5. UP has as well. There will be some more 3-to-2s out there, and we'll see how that evolves. But what this essentially does is it says that where we can -- we have operationally, we can get close to it. And commercially, we're feasible kind of solution to that is that we would be the partner of choice for those. So that's how that piece works. On Eagle Pass, on the kind of Memphis Eagle Pass route -- yes, this is for traffic that can move the market between Canada and Mexico, southbound and northbound. It's a considerable marketplace. We've sized it out over time with Fernando and his team at the FXE. This gives us direct access to get at it over Memphis, which we can be very fast. We're really excited about that. Also on the EJ&E deal with the Union Pacific, that applies only to U.S. business origins and destinations as well. I hope that, that is helpful. Operator: Your next question comes from the line of Brandon Oglenski with Barclays. Brandon Oglenski: Tracy, I guess, you did address that you think this resolves the competitive issues you had with the deal specifically within your network. But more broadly, how do you think if this deal goes through, it's going to impact broader industry competition, especially longer term? Tracy Robinson: Thanks, Brandon. Listen, I think we've all been -- we've all had a question about that. And at CN, as we've talked about this, we've said we're not opposed to mergers. We are very favorable on competition. So the big question on this on a broader basis on the merger is what it does to competition. We can't speak to the broader deal, but we've spoken to what is the impact from our network perspective. But we'll see. We're going to launch into a process that will -- we've already launched into a process that's going to be very thoughtful. And I know, knowing Patrick Fuchs and the Board of the STB will be very thorough to ask and answer all of the very important questions as to this merger. So that's all ahead of us. And what happens beyond that, I think we'll wait to see first before we comment on what happens on this part of it. Operator: Your next question comes from the line of Chris Wetherbee with Wells Fargo. Christian Wetherbee: I guess maybe I wanted to ask a little bit on the guidance. We talked a lot about the merger. So kind of curious about the guidance. I think previously, sort of flattish RTMs and EPS growth a little bit above that, the kind of the spread between RTM and EPS and the guide is a little wider. So I was hoping you could kind of expand a bit on that. Obviously, Ghislain, I think you talked about fuel potentially being a good guide for you from an earnings perspective, at least in the third quarter. But how do you think about sort of the operating leverage of the business now? As we see RTMs kind of go through the rest of the year, can we assume that, that sort of decent spread of operating leverage and performance to the bottom line can continue? Just want to get a rough sense of sort of what's changed from the earlier outlook relative to where we are now? Tracy Robinson: We've had a really strong first half. I'm really proud of what the team has done on it. The operation has been very strong, fluid. You've heard Pat talk about the productivity that we've been able to drive. Janet has done a great job of being able to use that service to convert a whole bunch of opportunities not only to take advantage of what's there, but to increase our share of market and to be nimble with our customers, and you've heard us talk about our boots on the ground program. So we're out there with some intensity. So all of that, which we are in control of it's gone very well. I would say overall, volumes are much stronger than we anticipated at the beginning of the year that they will be this year. I'm not expecting that will change as we go, you're seeing our volumes in the second quarter. We do have a pretty tough comp on Q4. Last year in Q4, we hit a record in grain and operationally, we exceeded all of our own expectations. And so we'll have a tougher comp in Q4 as we look forward. I think the question marks as we look at the remainder of the year are more around those things that are moving around outside of it. It's more around kind of more fuel will go, the impact of that. Maybe a little bit of currency. We have a little bit of tariff action that's moving around. So we'll see where all that goes. But we think that we want to be disciplined as we think about guidance, and we're comfortable with where we put the peg at this point. Operator: Your next question comes from the line of Ravi Shanker with Morgan Stanley. Ravi Shanker: Tracy, I just wanted to follow up on your previous response. I think you've said in the past that you haven't had the confidence even with a lot of promise on the volume side. Seems like that confidence is building. Can you share your conversations with your customers, particularly around, again, we've had some kind of catalyst on USMCA pass. It looks like we know what the next generation of tariffs look like. Do you feel like there was any pull forward into the first half of the year? Do you feel like there's any pent-up demand past these catalysts? Or kind of what are your customers telling you about their inventory restocking plans? Tracy Robinson: I'll start with that, but then I'm going to turn it over to Janet to talk more specifically. Like we've watched this tariff -- the global, the trade, the tariff, all the impacts from some of the geopolitical events and the impact that has either on the volume that we move or the corridors that we move it in. And I'm really proud of the work that Janet's team has done to be out there with customers and respond. You heard us say that our metals business, for example, despite the difficulties in the metals marketplace, our metals business has -- we've been able to mitigate most of that impact. Forest products is still feeling, they could use housing starts to lift. As we look at tariffs, from where we are now, certainly, we're all reading in the newspaper around what's happening on that front. We remain hopeful that we will come to a productive, constructive, positive agreement for all, all 3 countries. And what we've embedded in our guidance as we look forward is a tariff level that looks a lot like what it is right now, Janet? Janet Drysdale: Yes. I would say, Ravi, we might have had a little bit of pull forward. I think I referenced that on lumber. That probably has more to do with just kind of fuel surcharges and building up some inventories. We saw in the U.S., some more significant pull forward in the context of intermodal that wanted to come into the United States ahead of this tariff regime changeover, I'll call it. That was certainly less impactful from a CN perspective. So broadly speaking, no, I don't think we've had a whole lot of pull forward. And I think to Tracy's point, our customers have become very adept at managing the situation, and we've been there to support them along the way as they've changed some of their supply chains. Thanks for the question. Operator: Your next question comes from the line of Konark Gupta with Scotiabank. Konark Gupta: Tracy, I understand UP will be responsible for any investments needed at the J to support their volume growth, if needed. But as you firm up the MOU with them, how are you tackling the risk mitigation around potential congestion issues that may arise in and around Chicago, if UP ends up driving a lot of volumes through the J? Tracy Robinson: Listen, we spend a lot of time, and Pat has spent some time with Eric on how this whole thing will work, and we remain in control of the J. we've got surplus capacity right now on various parts, different on different parts of the J. So we'll control how that volume comes on. And our agreement says that if we see any strain, so they will not get in the way of our traffic. If there is any constraint or any strain on volume and the capacity needs to be expanded, that we will trigger that, and they will fund the expansion. Of course, we may do the expansion, they will fund the expansion. And we're locked on that approach. Operator: Your next question comes from the line of Scott Group with Wolfe Research. Scott Group: So just 2 quick things. One, as the STB process plays out going forward, just practically speaking, does this just mean that you don't participate like no more filings if there's hearings you don't participate? Is that like how we should think about your role going forward here? And then, Ghislain, on the fuel side, like clearly going to help this year now. Like anything you can do to like protect yourself on the way down for fuel? I know a few years ago, it was an issue. Is this just naturally how it's going to work? Or is there anything that can be done to protect yourself? Tracy Robinson: Scott, I'll start on the first one. So we've agreed not to oppose. So yes, we won't have a large voice in the merger consideration as we go forward. However, if there are questions, we'll obviously be involved in anything related to the agreement that we have, explaining or defending or whatever the action may be. But yes, largely, our considerations, our worries have been taken care of. So you won't hear as a big a voice. And Ghis? Ghislain Houle: Yes. Scott, on the fuel side, as you know, fuel surcharge is a hedge. It's working well, but because there's a lag because there's a 2-month lag, then on the short-term basis, it does create noise. And as you know, and you've been around this business for quite a while, I've been around this business for quite a while as well. There's a lot of movements and volatility around fuel prices, especially with what's happening in the Middle East. So it does create more noise. But I mean, it's just what it is and you know the formula, and we just live with it. We try to provide visibility on it every quarter and what's coming up. We'll see what it does. Now it looks like it's positive for the second half of the year, but that could turn very quickly. So we'll see. But there's nothing much we can do on the downside. But as I said, it's a hedge and it's working quite well to hedge ourselves against ups and downs of fuel prices. Operator: Your next question is going to come from the line of David Vernon with Bernstein. David Vernon: So coming back to the MOUs for a second. I want to talk a little bit about magnitude. As you think about the agreement on the E and then the access down to Eagle Pass, the amount of capacity that you have on haulage from the border is going to matter. And obviously, how many trains are going to be running through there? Is there any way you can kind of quantify commercially, Janet, like is this going to start to impact numbers next year? Is it going to be noticeable. And then as you think about implementing the second part of the agreement, the contingent trackage rights to Kansas City. Is there additional investments you're going to need to make to operationalize that? I think when you guys were going after KCS as a business a long time ago, there was some discussion around of investment in extending your lines capacity there. I'm just wondering if there's additional capital or operating resources you're going to need to put into operationalizing that Kansas City Link. Tracy Robinson: So let's -- David, I'm glad you're back. Let me start on that. So as we think about it, as we've long looked at our network, like we really like the positioning of our network with where we sit across the natural resource base in North America, our access to ports, our ability to get down into the Gulf Coast. What we've always aspired is how do we extend our network, and these agreements do it in a meaningful way in getting it into Mexico and ultimately contingent on the merger into Kansas City. And so as we've talked with Jim and the Union Pacific about how this would work, we start in the case of Mexico at a haulage arrangement. But as volumes grow, we can trigger trackage rights. And there's not a lot of concerns along that route right now on when we hit any capacity. But if we do hit capacity constraints and similar to the reverse on the J then we would be funding whatever expansion would be required then. We don't anticipate that, that's likely in the near term, and we have largely the capacity we need to make that work right now. So you're going to see haulage start very quickly. On the Kansas, I'll talk about the Kansas City side, and then, Janet, I'll turn it over to you, and Pat, any comments you want to add to it. On the Kansas City side, should the merger be approved, we come on to the line of Tuscola, but I'll let Pat comment. We do need to build a bit of a connection there that would be funded by us. On the landing side, we have an agreement with Union Pacific to utilize their Neff Yard in Kansas City. So we've got a landing spot for all of the commodities that we would move through that corridor. Do you want to talk about the connection to Tuscola, and then Janet will go to you? Patrick Whitehead: I do. Thank you. And I would say, think about these differently. So different than the KCS application, some of the wording there, that was capacity that would need to be built to access Springfield, Illinois, where we have existing trackage rights with Union Pacific. That is not our core main line. Tuscola is off of our core main line between Chicago and Memphis. It is our fastest route to get south and this will be a new connecting track, just a connecting track to connect to Union Pacific, where there's a diamond in Tuscola. And we'll access St. Louis and eventually Kansas City via that connection. So very different than what we put in the application and you saw needed to be invested to get to Springfield. This will be one connection track and then the Neff Yard discussions that will be ongoing. Janet Drysdale: Yes, David. Thanks for the question. From a revenue perspective, let me just give you a sense of sequencing. When we're -- the current movements that we have today from Canada into Mexico, the immediate benefit to us is going to be the extended length of haul as we move the interchange south into Memphis. So that happens as soon as we kind of get the definitive agreement in place and we'll see some of that flowing in this year. And then the team is very, very focused on the addressable market and what we can do to provide a great service to the customers that want to move their goods between Mexico and Canada. So more to come on that. Thanks for the question. Operator: Your next question comes from the line of Brian Ossenbeck with JPMorgan. Brian Ossenbeck: One first quick follow-up just to make sure I heard correctly, but if there's any other decisions or concessions that are done through the merger review process, the agreements here seems like they don't exclude you from participating in those. So just that's the first clarification. And then for Janet, maybe you can go into more details on some of demarketing. It sounds like you're doing in Vancouver, maybe the relative scope and size, assuming that's international intermodal, but I would like to hear a little bit more about that. Tracy Robinson: Brian, I'll start. So our agreement with Union Pacific is that we will not oppose. If there are interventions that we need to make in response to questions from the STB or to support the agreement that we have, with the Union Pacific then we will participate in that. I hope that answers that portion of your question. Janet? Janet Drysdale: Yes. So Brian, our approach to pricing has been very, very consistent. Baseline is we want to price ahead of rail cost inflation. We also want to price to the value of our service. And as you know well, our corridor between Vancouver and all the way into Chicago, Montreal, Toronto has a lot of traffic, and it's an important piece of our network. So yes, the piece of business we demarketed is in the overseas intermodal and I think I've said enough on that one. Thanks for the question. Operator: Your next question comes from the line of Benoit Poirier with Desjardins. Benoit Poirier: Yes. [Foreign Language] Congratulations for the results. Could you talk maybe about the opportunities to convert trucks on the rails, given the high spot rates we see these days and kind of what you see in terms of discussion with some customers and what could evolve in terms of intermodal opportunities? Janet Drysdale: So we are seeing, Benoit, some truck to rail conversion. When we look at our own domestic intermodal franchise though for CN, it is more skewed to Canada. And our average length of haul was in the 1,700 to 1,800 mile range. So we have a pretty high market share already, I would say, of the long-haul trucking business in Canada. So I think the short answer is, yes, there's some opportunities, probably not as much as what we're seeing in the U.S. truck capacity there is tightening more significantly than what we're seeing in Canada. But we're encouraged by what's happening so far. And of course, any tightening of capacity is also supported from a rate perspective. Thanks for your questions. Operator: Your next question comes from the line of Tom Wadewitz with UBS. Thomas Wadewitz: I know you've gotten a lot on the UP agreements, but I want to ask you kind of 2 elements on that. And congratulations on the agreement. It seemed like a really nice strategic move. So -- the -- let's see, on the Kansas City element, I guess, is there a way, because I think UP has implied 2-to-1, 3-to-2 is something a little less than 40 shippers. Can you give us a little more color? Are there some large shippers there? Or is it kind of relatively small carload shippers just a little more perspective so we can kind of maybe think about sizing it. And then on the Canada to Mexico, is there any other information to contemplate the type of commodities you think would be opportunity? Is it a lot of it auto and intermodal? Is it a lot of it bulk? Or just how you think about that market and where you would see the growth on that Canada to Mexico? Tracy Robinson: Tom, thanks for the question. On the 2-to-1, I think we're all aligned that there's probably about 5 of those. Some of those are very meaningful accounts. Some are smaller. Harder to say on the 3-to-2, that will be a broader group, and I'm sure some of that will be contested. So we'll see how that plays out as we go forward. We've quantified it, and we don't think it's the biggest piece of this merger based on our broad estimates by any stretch, the bigger and most impactful parts of this, of course, are the extension of our network into Kansas City with the settlement agreement. We're really excited about that. On the Canada and Mexico, let me start on this. This is all commodities, and we've been working. And it's not just southbound, it's northbound as well. We've been working for some time on a 3 railroad haul on this. The 2 railroad haul gives us a much better -- a much more direct kind of marketing campaign, and they -- we think a better route through Memphis faster. And -- but it's all commodities. We've been working on all commodities. But I'm going to let Janet give you a little -- so Janet, do you want to add a little further? Janet Drysdale: Yes. I can take it a little further. I maybe think for sure, Tracy's point as well said, it's northbound, it's southbound. It's all commodities. When we think about the contour of the different business segments, for sure. Automotive is a heavy hitter. We're already been tackling the intermodal. We continue to believe that there's really good opportunities for truck to rail conversion. Not easy, but we just heard, you just heard me say that truck capacity is tightening in the U.S., and this is one area where it is quite supportive for us and for that product, ag, energy, petroleum and chemicals of all sorts. So it is a broad-based opportunity that we see between Mexico and Canada. Thanks for the question. Operator: We have time for one more question, and that question comes from the line of Jonathan Chappell with Evercore ISI. Jonathan Chappell: Pat, you gave us an update on the Fast Track work that you've been doing, and you've done with a review of most of the major terminals. You also highlighted $100 million of cost savings that you've identified this year. Trying to understand, if that $100 million, have we seen any of that thus far in the first half? Or if this is what you've identified thus far and you start to see that savings really start to shake out in the second half of the year? And then also, you mentioned still looking at some intermodal terminals and facilities. Is there a chance that, that $100 million becomes something greater as we think about run rate into '27? Patrick Whitehead: Thank you for the question. And I'll say this, the $100 million that is the savings we have realized. And let me say it this way, Fast Track is part of how we run this railroad now. And I would say the work we're moving as we've looked at the major terminals, we've moved on to intermodal terminals, nonrail operations. We have had a thorough review of our rubber tire fleet. We will continue to double-click into purchased services. And I would -- and facilities, we called that out as well. And I will say this is a muscle we will continue to exercise. We feel good about the additional opportunities, and we're going to chase every dollar. Tracy Robinson: Thank you all. Listen, we appreciate your time today. Let me just say this as we close. This team has always been excited about our prospects. We love our franchise. We've got great access, North American markets, great access to global markets. We've got investment in natural resources and whether it be ag, it'd be energy, it'd be mining, that's continuing on, our customers are investing. There's not often in a railroad career though, that you get to meaningfully expand and extended network. And so we're really -- we're even more excited now about the prospects what we can do with this network, how we can bring more to our customers into the industries that we serve. Thank you for your interest in it. And we'll talk to you soon. Operator: Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation, and you may now disconnect. Before you buy stock in Canadian National Railway, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Canadian National Railway wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. 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As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool recommends Canadian National Railway. The Motley Fool has a disclosure policy. CNI (CNI) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

This article first appeared on GuruFocus. EPS Growth: 12% FX adjusted on 5% volume growth. Revenue Growth: Up 11% year over year on 5% RTM growth. Adjusted Operating Ratio: 62.2%, a 50 basis point increase from last year. Free Cash Flow: Up approximately 20% or roughly $300 million year-to-date. Adjusted Diluted EPS: $2.08, up 11% from last year. Fuel Efficiency: Record performance in Q2 and first half of the year. Labor Productivity: Improved approximately 9%. Locomotive Productivity: Improved approximately 6% in the quarter. Grain Volumes: Record volumes of Western Canadian grain. Petroleum & Chemicals RTMs: Up 11%. Domestic Intermodal Growth: Solid growth into Canada. Operating Expenses: Labor up 3%, fuel expense up $250 million due to higher prices. Leverage: 2.6 times at the end of Q2. Updated Full Year Outlook: Mid- to high single-digit adjusted diluted EPS growth expected. Warning! GuruFocus has detected 3 Warning Signs with BOM:532134. Is CNI fairly valued? Test your thesis with our free DCF calculator. Release Date: July 24, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Canadian National Railway Co (NYSE:CNI) reported a 12% growth in EPS, FX adjusted, on a 5% volume growth, showcasing strong financial performance. The company has improved productivity, moving more volumes with fewer people and achieving record fuel efficiency in the first half of the year. Strategic agreements with Union Pacific are expected to enhance network reach and provide competitive access to important markets in Kansas City and Mexico. The company has seen significant growth in various segments, including grain, potash, and petroleum & chemicals, with revenues up 11% year over year. CNI has realized approximately $100 million in benefits from its Fast Track initiative, focusing on continuous improvement and efficiency across the network. The company faces risks and uncertainties from economic conditions, competition, fuel prices, and regulatory changes, which could impact actual outcomes. There is potential for significant impact from wildfires in Northern Ontario and British Columbia, although currently, the mainline remains open. Overseas Intermodal volumes are expected to be weak in the second half of the year, partly due to the demarketing of certain low profitability shipments. The company anticipates more challenging year-over-year comparisons in the fourth quarter, particularly in the grain segment. Broader macroeconomic volatility, including potential changes in trade and policy discussions, remains a concern for the company's outlook. Q: Can you provide more details on the MOU with Union Pacific and the markets you plan to focus on? How will you assess and communicate new customer wins or volume growth on the new route? A: The first agreement is a commercial one that will start once the definitive agreement is in place, giving us immediate access to Ferro mix in Mexico through the Memphis Gateway. This allows us to market directly with FXE in Mexico for southbound and northbound volumes. We will target all markets, including those currently moving on rail and the expansive truck market between Mexico and Canada, estimated at around $3 billion. The second agreement provides access to Kansas City, contingent on the merger's success. Q: Can you elaborate on the year-to-date growth of the energy business and expectations for next year? A: We are seeing strength in refined products, mainly gasoline and diesel, associated with our new GTA fuel terminal. We started ramping up phase two of the terminal in April, and we expect continued growth into 2027. The NGLs segment is also expanding, supported by new fractionation capacity coming online in the second half of the year. This is a multi-commodity and multiyear opportunity, with significant growth expected in the energy franchise. Q: Could you break down the revenue per RTM growth and discuss the impact of fuel and core pricing into the second half? Also, is there any impact from wildfires on results? A: We continue to price ahead of rail cost inflation, with fuel contributing to revenue per RTM growth. The pattern is expected to continue into the third quarter. Fuel had a dilutive impact on the operating ratio by 210 basis points in Q2. Regarding wildfires, there has been minimal impact on operations, with some traffic bunching due to temporary shutdowns in Northern Ontario. Q: How are you addressing potential congestion issues around Chicago with the MOU with Union Pacific? A: We remain in control of the J and have surplus capacity on various parts. We will manage how volume comes on, and if capacity needs to be expanded, Union Pacific will fund the expansion. We are locked on this approach to ensure our traffic is not impacted. Q: Can you provide more details on the Fast Track initiative and the $100 million in cost savings identified this year? A: The $100 million in savings has been realized, and Fast Track is now part of how we operate. We have reviewed major terminals and are moving on to intermodal terminals and non-rail operations. We will continue to explore additional opportunities, including purchased services and facilities, to chase every dollar. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Canadian National (CNI) came out with quarterly earnings of $1.5 per share, beating the Zacks Consensus Estimate of $1.39 per share. This compares to earnings of $1.35 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +7.91%. A quarter ago, it was expected that this railroad would post earnings of $1.31 per share when it actually produced earnings of $1.31, delivering no surprise. Over the last four quarters, the company has surpassed consensus EPS estimates three times. CN, which belongs to the Zacks Transportation - Rail industry, posted revenues of $3.43 billion for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 5.44%. This compares to year-ago revenues of $3.09 billion. The company has topped consensus revenue estimates four times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. CN shares have added about 32.1% since the beginning of the year versus the S&P 500's gain of 8.2%. While CN has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for CN was unfavorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #4 (Sell) for the stock. So, the shares are expected to underperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $1.43 on $3.18 billion in revenues for the coming quarter and $5.67 on $12.89 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Transportation - Rail is currently in the bottom 24% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Another stock from the same industry, Canadian Pacific Kansas City (CP), has yet to report results for the quarter ended June 2026. The results are expected to be released on July 29. This railroad is expected to post quarterly earnings of $0.89 per share in its upcoming report, which represents a year-over-year change of +9.9%. The consensus EPS estimate for the quarter has been revised 0.7% lower over the last 30 days to the current level. Canadian Pacific Kansas City's revenues are expected to be $2.91 billion, up 9% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Canadian National Railway Company (CNI) : Free Stock Analysis Report Canadian Pacific Kansas City Limited (CP) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Canadian National Railway Company (NYSE:CNI) reported stronger-than-expected second-quarter results on Friday, surpassing analyst forecasts for both earnings and revenue while raising its financial outlook for the remainder of 2026. Shares of the railway operator rose 0.97% in premarket trading following the release as investors welcomed the improved guidance and continued operational momentum. CN Railway posted adjusted earnings of C$2.08 per share for the second quarter, ahead of analysts’ consensus estimate of C$1.93 per share. Quarterly revenue reached C$4.75 billion, exceeding market expectations of C$4.56 billion and increasing 11% from C$4.27 billion in the corresponding period last year. The company attributed the stronger performance to higher freight volumes, particularly in grain and energy products. Following the solid quarterly performance, CN revised its full-year guidance higher. The company now expects revenue ton miles to grow at a low single-digit rate during 2026, compared with its previous forecast for flat growth. Management also continues to project adjusted diluted earnings per share growth in the mid-to-high single-digit range, with the updated outlook reflecting stronger business momentum than previously anticipated. Revenue ton miles increased 5% year-on-year to 62,250 million during the quarter. “I want to thank the CN team for the strong results this quarter, which reflect their discipline, focus, and execution,” said Tracy Robinson, President and Chief Executive Officer. “We delivered on our key commitments, with solid operational and commercial performance, improved productivity, strong cash flow generation, and continued financial discipline.” Diluted earnings per share rose 10% year-on-year to C$2.06, while adjusted diluted EPS increased 11% to C$2.08, or 12% on a constant currency basis. Operating income advanced 9% to C$1.78 billion during the quarter. The operating ratio, however, increased by 80 basis points to 62.5%, indicating slightly higher operating costs relative to revenue. CN generated free cash flow of C$1.84 billion during the first half of 2026, representing a 19% increase from the same period last year. The company also repurchased approximately 2.9 million shares during the quarter for C$454 million and declared a third-quarter dividend of C$0.9150 per share. Operationally, the railway achieved record fuel efficiency during both the second quarter and the first half of the year, while gross ton miles increased 3% to 121,082 million. Canadian National Railway Company stock price

Interested in Canadian National Railway Company? Here are five stocks we like better. Canadian National Railway raised its 2026 outlook after a strong second quarter, with 12% exchange-adjusted EPS growth, 5% volume growth and higher revenue. Management now expects low-single-digit RTM growth and mid- to high-single-digit adjusted diluted EPS growth, versus prior guidance for roughly flat volumes. Operating performance improved across the network, with better productivity, the best second-quarter and first-half fuel efficiency in company history, and about C$100 million in Fast Track benefits so far this year. Free cash flow rose about 20% year to date, and CN ended the quarter with leverage at 2.6x. CN highlighted strong commodity trends, including record Western Canadian grain and potash volumes, rising petroleum and chemicals traffic, and 11% growth in metals volumes. It also announced agreements with Union Pacific that expand market access, including Canada-to-Mexico routing rights through Memphis and potential Kansas City access tied to the proposed merger process. 3 Boring Infrastructure Stocks That Could Beat the Market in 2026 Canadian National Railway (NYSE:CNI) raised its 2026 outlook after reporting second-quarter earnings growth, higher volumes and what management described as improved productivity across its network. President and Chief Executive Officer Tracy Robinson said the company delivered 12% exchange-adjusted earnings-per-share growth on 5% volume growth during the quarter. CN now expects low-single-digit growth in revenue ton miles for 2026 and mid- to high-single-digit adjusted diluted EPS growth, compared with its prior assumption for roughly flat volumes. → Could Truth API Become Trump Media’s First Meaningful Revenue Driver? 3 Stocks To Watch For When Tariffs Subside “The engine's running well,” Robinson said, citing operating execution, commercial activity, cost discipline and capital management. She said the company expects year-over-year comparisons to become more difficult in the fourth quarter, particularly because it is lapping record grain performance from the prior year. Chief Financial Officer Gilles Lelièvre said reported diluted EPS totaled C$2.06, up 10% from a year earlier. Adjusted diluted EPS was C$2.08, up 11%, or C$2.09 on an exchange-adjusted basis, representing 12% growth. The results included a C$17 million adjustment for advisory fees related to industry consolidation. → GE Vernova Just Sent a Mixed AI Signal to Investors Trade War Bargain Stocks: Top 3 Picks Too Good to Pass Up Revenue rose 11% year over year as RTMs increased 5%, according to Chief Commercial Officer Janet Drysdale. CN reported an adjusted operating ratio of 62.2%, compared with 61.7% a year earlier. Lelièvre said higher fuel prices had a 210-basis-point unfavorable effect on the operating ratio. Year-to-date free cash flow increased about 20%, or roughly C$300 million, driven by stronger earnings, disciplined capital spending and working-capital management, partly offset by higher tax payments. CN ended the quarter with leverage of 2.6 times and maintained its target of 2.7 times adjusted debt to adjusted EBITDA for 2026. → D-Wave Quantum or a Quantum ETF: Which Is the Better Bet? On an exchange-adjusted basis, labor expense increased 3%, reflecting wage increases and about C$40 million more in incentive compensation, partly offset by a 5% reduction in average headcount. Fuel expense increased about C$250 million from the prior-year period because of higher prices, while purchased services and materials rose 11%, including advisory costs and higher trucking and vessel costs associated with volume growth. Chief Operating Officer Pat Whitehead said CN moved 3% more gross ton miles while using existing assets and capacity more efficiently. Locomotive productivity improved about 6%, employee productivity improved about 9%, and train-and-engine employee productivity increased about 13%. Average train length rose approximately 1%. CN also reported its best second-quarter and first-half fuel-efficiency performance in its history. Whitehead said the company improved efficiency through train handling, locomotive utilization and operating practices while maintaining transit-time performance. The company’s Fast Track continuous-improvement program generated close to C$100 million in realized benefits so far this year, Whitehead said. The review of an initial group of major terminals has largely been completed, while work continues at intermodal terminals, network operations centers and other areas including purchased services and facilities. Whitehead said car velocity and network train speed were largely flat year over year despite higher volumes, while metrics improved during the quarter after being affected by the end of winter conditions in April. In Western Canada, CN handled record grain volumes alongside higher refined petroleum products, potash and natural gas liquids, while car velocity, train speed and dwell each improved by roughly 3%. CN is monitoring active wildfires in Northern Ontario and British Columbia. Whitehead said the company’s main line through Northern Ontario was open and management did not expect a significant effect on the business, though it had experienced some traffic bunching during a shutdown. Drysdale highlighted record second-quarter volumes for Western Canadian grain and potash, as well as strong U.S. grain movements. Petroleum and chemicals RTMs rose 11%, supported by increased long-haul refined-product shipments from Western to Eastern Canada, growth into the Greater Toronto Area fuel terminal and higher NGL exports through Prince Rupert. Metals volumes increased 11% despite tariffs on steel and aluminum, as CN worked with customers on supply-chain changes, according to Drysdale. Domestic intermodal also grew, while overseas intermodal volumes rose sequentially but declined from a year earlier due to difficult comparisons with tariff-related volume pull-forwards in the prior year. CN expects grain strength to be a principal driver of third-quarter RTM growth. Management expects continued momentum in refined products, new crude business and NGL exports. Domestic intermodal is expected to remain strong, while overseas intermodal is expected to weaken in the second half, partly due to the demarketing of certain low-profitability Port of Vancouver shipments. Automotive share gains and offshore imports into Canada are expected to offset generally flat production. Canadian coal volumes will depend on mine production and operating conditions, while U.S. export demand remains supportive. Robinson also discussed two agreements announced with Union Pacific. A commercial agreement, which is effective once definitive documentation is completed and is not contingent on a merger, gives CN rights for Canada-to-Mexico traffic through Memphis and direct access to Ferromex. CN said the arrangement extends its length of haul from Chicago to Memphis and creates opportunities for northbound and southbound traffic across commodities, including automotive, intermodal, agriculture, energy and chemicals. In return, Union Pacific will receive rights to additional capacity on CN’s EJ&E line for U.S. traffic. Robinson said CN will retain control over capacity and Union Pacific would fund any required expansion tied to its volumes. A separate settlement agreement, contingent on Surface Transportation Board approval and closing of the proposed Union Pacific merger, would provide CN access to Kansas City and use of Union Pacific’s NEF yard. CN said it identified five “two-to-one” customers under the agreement, with additional “three-to-two” opportunities expected to evolve through the regulatory process. CN agreed not to oppose the merger, saying the agreements had largely addressed its concerns while creating new growth opportunities. Robinson said the company would still participate if questions arise concerning its agreements with Union Pacific. Canadian National Railway Company (NYSE: CNI) is a Class I freight railway that operates an integrated rail network across Canada and the United States. Headquartered in Montreal, Quebec, CN provides long-haul freight transportation and related logistics services that connect major ports, industrial centers and inland markets throughout North America. Its transcontinental system enables cross-border movement of goods and supports supply chains that span coast-to-coast in Canada and into the central and eastern United States. CN's core business is the railborne transportation of a broad mix of commodities, including intermodal container traffic, forest and paper products, grain and other agricultural products, metallurgical and industrial products, petroleum and chemical products, coal and automotive shipments. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Canadian National Railway Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for July 2026.

For the quarter ended June 2026, Canadian National (CNI) reported revenue of $3.43 billion, up 11.2% over the same period last year. EPS came in at $1.50, compared to $1.35 in the year-ago quarter. The reported revenue compares to the Zacks Consensus Estimate of $3.26 billion, representing a surprise of +5.44%. The company delivered an EPS surprise of +7.91%, with the consensus EPS estimate being $1.39. While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Street expectations to determine their next course of action, some key metrics always provide a better insight into a company's underlying performance. As these metrics influence top- and bottom-line performance, comparing them to the year-ago numbers and what analysts estimated helps investors project a stock's price performance more accurately. Here is how CN performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts: Operating Ratio: 62.5% versus the five-analyst average estimate of 63.2%. Carloads - Total: 1.41 million versus 1.41 million estimated by four analysts on average. Carloads - Coal: 110 thousand versus the four-analyst average estimate of 110.81 thousand. Carloads - Forest Products: 70 thousand versus 69.24 thousand estimated by four analysts on average. Carloads - Automotive: 58 thousand versus 57.05 thousand estimated by four analysts on average. Carloads - Intermodal: 573 thousand versus the four-analyst average estimate of 586.5 thousand. Revenue Ton Miles - Petroleum & Chemicals: 11.87 billion versus 11.64 billion estimated by four analysts on average. Carloads - Petroleum & Chemicals: 170 thousand compared to the 166.4 thousand average estimate based on four analysts. Revenue Ton Miles (RTM): 62.25 billion compared to the 60.86 billion average estimate based on four analysts. Revenue Ton Miles - Metals & Minerals: 7.03 billion versus the four-analyst average estimate of 6.85 billion. Revenue Ton Miles - Automotive: 953 million compared to the 899.93 million average estimate based on four analysts. Carloads - Metals & Minerals: 234 thousand versus 231.96 thousand estimated by four analysts on average. View all Key Company Metrics for CN here>>> Shares of CN have returned +8.5% over the past month versus the Zacks S&P 500 composite's +0.6% change. The stock currently has a Zacks Rank #4 (Sell), indicating that it could underperform the broader market in the near term. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Canadian National Railway Company (CNI) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research