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February 4, 2025

CN Faces Financial Challenges as Revenue Surges

  • CN’s latest report shows an earnings per share (EPS) of C$1.82, falling short of expectations and highlighting ongoing financial challenges.
  • Despite this, CN exceeded revenue forecasts with C$4.35 billion compared to the anticipated C$1.44 billion.

CN (TSX: CNR) (NYSE: CNI), a dominant entity in the North American rail sector, provides essential freight transport services across Canada and the U.S. The company faces stiff competition from rivals like Canadian Pacific Railway and Union Pacific Corporation.

On February 4, 2025, CN reported its EPS at C$1.82, which was lower than the expected C$3.26. However, the company reported revenues of C$4.35 billion, surpassing earlier estimates.

In the fourth quarter of 2024, CN experienced several obstacles, including a 3% dip in revenue ton miles (RTMs) to 59.3 billion, leading to a revenue decrease of 3% to C$4.36 billion. Operating income fell by 10% to C$1.63 billion, with the operating ratio climbing by 3.3 points to 62.6%, signifying increased operating costs relative to revenues.

Further analysis of CN’s financials indicates challenges ahead. The enterprise value to operating cash flow ratio stands at a concerning -53.88, suggesting difficulties in generating cash flow from operations. Moreover, with a debt-to-equity ratio around 6.21, CN faces substantial leverage, potentially posing threats to its financial viability.

Despite these financial hurdles, CN showcases a current ratio of approximately 1.65, indicating adequate liquidity to manage short-term liabilities. CEO Tracy Robinson expresses confidence in the momentum CN has as it embarks on 2025, affirming their commitment to growth and operational efficiency.

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