Canadian Rail Co’s Set to Report

A quick glimpse at what to expect when results are released this week.

| More on:
The Motley Fool
You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

After today’s close CN Rail (TSX:CNR,NYSE:CNI) is set to report its 2nd quarter results – officially kicking off earnings season on this side of the 49th parallel.

On Wednesday, it’s CN’s rival Canadian Pacific Railway’s (TSX:CP,NYSE:CP) turn.

The tables below capture what is expected of each when their results hit the tape.

Revenues

Q2’13 Revs(E)

Q1’13 Rev

vs. Est.

Q2’12 Rev

vs. Est

CNR

$2,692

$2,466

9.2%

$2,543

5.9%

CP

$1,511

$1,495

1.1%

$1,366

10.6%

Source:  Capital IQ

Revenue growth is forecast to be solid, but not outstanding.  With year-over-year growth of 10.6% expected from CP, it seemingly has the stronger tail wind behind it at the moment.

Earnings

Q2’13 EPS(E)

Q1’13 EPS

vs. est.

Q2’12 EPS

vs. est

CN

$1.61

$1.30

23.8%

$1.44

11.8%

CP

$1.49

$1.24

20.2%

$0.60

148.3%

Source:  Capital IQ

This dynamic becomes even clearer when the expected earnings growth for both firms is stacked against each other.  EPS from CP is expected to have grown by almost 150% on a year-over-year basis.  That’s a rather astounding figure, especially given the mature nature of the rail business.

This growth however has more to do with the fact that a year ago, CP was not living up to its potential.  Under the guidance of a new management team, the gap between current performance and fulfilling its potential has shrunk.

Foolish Bottom Line

Over the past year, CP shares have clocked a return of 76% while CN has gained a “mere” 19%.  Although CP’s earnings are expected to continue to improve, given the move that the stock has had, much of this improvement has been priced into the company’s stock.  Over the long-term, from a relative standpoint, this bodes well for the more slow and steady pace that CN Rail is currently on.

Canada’s rail companies are no doubt 2 of the best businesses that this country has to offer.  For a glimpse at 3 of the best that our neighbors to the south can muster, click here now and download “3 U.S. Stocks That Every Canadian Should Own”.  It’s FREE!

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool Canada’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.

Follow us on Twitter and Facebook for the latest in Foolish investing.

Fool contributor Iain Butler doesn’t own shares in any of the companies mentioned at this time.  David Gardner owns shares of CN Rail.  The Motley Fool doesn’t own shares in any of the companies mentioned.   

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

More on Investing

Man holding magnifying glass over a document
Investing

3 Heavily Shorted TSX Stocks to Watch This Summer

Canadians should monitor heavily shorted TSX stocks like Canada Goose Holdings Inc. (TSX:GOOS)(NYSE:GOOS) in this bear market.

Read more »

Airport and plane
Investing

3 TSX Stocks Set to Take Off With Summer Travel

Canadians should direct their attention to the travel industry and snatch up TSX stocks like Air Canada (TSX:AC) and others…

Read more »

Investing

Young Investors: 3 Canadian Stocks You Can Trust as Inflation Rises

Inflation has soared to new heights, which should spur young investors to snatch up Canadian stocks like Empire Company Ltd.…

Read more »

analyze data
Cryptocurrency

2 Tech Stocks That Benefit From the Decline of Crypto

Crypto's bear market creates opportunities for traditional rivals like Lightspeed (TSX:LSPD)(NYSE:LSPD).

Read more »

Growing plant shoots on coins
Investing

Why This Canadian Growth Stock Could Double Next Thursday

This growth stock is set to soar if market recovery continues and what analysts expect from the company continues.

Read more »

Glass piggy bank
Investing

Market Correction: Boost Your Retirement Fund With These 2 Stocks

The correction in top TSX stocks presents a solid opportunity for investors with long-term financial goals to buy shares of…

Read more »

Happy family father of mother and child daughter launch a kite on nature at sunset
Dividend Stocks

Parents: Here’s Every Credit and Benefit You Can Claim From the CRA

Parents have it hard already, so make sure the CRA is doing everything for you by dishing out payments you're…

Read more »

edit Colleagues chat over ketchup chips
Dividend Stocks

3 Canadian Dividend Stocks to Buy and Hold for Life

These dividend-paying stocks have solid earnings base to support their payouts for decades.

Read more »