Canadian National Railway (CNR) operates North America’s only transcontinental rail network, linking Canada’s Pacific and Atlantic coasts with the U.S. Midwest and Gulf Coast. The company moves more than 300 million tons of goods annually, including grain, lumber, chemicals, energy, and consumer goods.
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Over the past decade, CNR has become synonymous with precision railroading and operational discipline. Its focus on velocity, asset utilization, and productivity has made it one of the continent’s most efficient carriers, consistently posting industry-leading operating ratios and return on invested capital.
For the second quarter of 2025, Canadian National reported revenue of C$4.15 billion and adjusted diluted EPS of C$1.97, up 13% year-over-year, as volumes improved across nearly all segments. The company generated C$1.5 billion in operating income and maintained an operating ratio of 61.4%, reflecting steady margin recovery. Management reaffirmed full-year guidance for mid-single-digit EPS growth and capital expenditures near C$3.5 billion, focused on network capacity and technology modernization.
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Financial Story
CNR’s second quarter confirmed a recovery is underway after a mixed 2024. Revenue rose 5%, reflecting improved intermodal traffic, record grain exports, and a rebound in the automotive sector. While fuel costs and labor inflation remained headwinds, disciplined pricing and operating leverage allowed the company to expand margins and deliver double-digit EPS growth.
| Metric | Result | YoY Change | Commentary |
|---|---|---|---|
| Revenue | C$4.15 B | +5% | Higher grain, intermodal, and automotive volumes |
| Operating Income | C$1.50 B | +12% | Driven by pricing and productivity gains |
| Adjusted EPS | C$1.97 | +13% | Margin recovery and fuel efficiency |
| Operating Ratio | 61.4% | –150 bps | Reflects cost control and network fluidity |
| Free Cash Flow | C$1.1 B | +7% | Strong earnings and capex discipline |
| Dividend | C$0.84/share | +8% | 28th consecutive annual increase |
| Share Buybacks | C$1.4 B YTD | — | Active capital returns |
| 2025 Capex Plan | C$3.5 B | — | Focused on track upgrades and automation |
Operating income climbed 12% to C$1.5 billion, with the operating ratio improving to 61.4%. The railway’s precision operating model, emphasizing velocity, scheduled train performance, and efficient asset utilization, remains central to its cost advantage over peers. CEO Tracy Robinson credited the team’s execution, noting record terminal throughput in Western Canada and strong service reliability across key corridors.
Management reaffirmed its 2025 outlook for mid-single-digit adjusted EPS growth and expects further efficiency gains in 2026 as volumes rise. Capital spending remains disciplined: the company has earmarked roughly C$3.5 billion for maintenance, yard automation, and capacity expansion along its Chicago–Winnipeg and Prince Rupert corridors. With network fluidity improving and intermodal partners expanding, CNR enters the second half of 2025 with growing operating momentum.
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Broader Market Context
Rail freight is entering a modest cyclical rebound after two years of soft demand and supply chain volatility. Easing inflation, stable fuel prices, and rising North American exports have all helped revive shipment volumes. CNR, with its diversified mix of bulk and merchandise traffic, stands to benefit from this normalization more than peers that rely heavily on energy or industrial commodities.
At the same time, competition for long-haul freight remains fierce. Trucking rates have fallen sharply, and shippers continue to demand reliability and service speed, areas where CNR’s technology investments are increasingly critical. Its ability to sustain service quality while controlling costs will determine how much operating leverage it can capture as demand improves into 2026.
1. Intermodal and Automotive Drive the Recovery
Intermodal remains CNR’s fastest-growing segment, supported by improving port fluidity and expanded partnerships with logistics providers. The company’s Prince Rupert and Vancouver terminals handled record volumes in Q2, while cross-border traffic into the U.S. Midwest strengthened, driven by new retail and e-commerce customers. These routes have become increasingly vital as more shippers shift freight from congested U.S. West Coast ports to Canadian gateways.
Automotive shipments climbed 11% year over year as North American vehicle production normalized. Demand from electric vehicle manufacturers and parts suppliers continues to strengthen, and CNR’s geographic reach allows it to serve emerging EV supply chains across Ontario, Michigan, and Mexico. With more automakers reshoring production to North America, CNR’s exposure to this sector could be a structural growth driver through the end of the decade.
2. Grain and Bulk Rebound Boosts Core Freight Mix
After two uneven crop years, grain volumes rebounded 14% year over year, helping offset softness in petroleum and chemicals. CNR’s grain elevators in Western Canada operated near full capacity through the quarter, and export demand from Asia remained solid. Favorable weather conditions and new grain-handling technology should support sustained volumes into the next harvest cycle.
Bulk commodities, while less dynamic, continue to provide stable cash flow. Management highlighted improved potash volumes and solid performance in forest products as construction activity steadies. With agricultural demand resilient and global fertilizer trade recovering, these segments help stabilize CNR’s earnings base during cyclical downturns.
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3. Efficiency and Technology Investments Sustain Margins
CNR’s capital allocation remains laser-focused on efficiency. Roughly C$1.8 billion of its annual C$3.5 billion capex plan is dedicated to infrastructure renewal, signaling an ongoing commitment to safety and to improvements in velocity. The remainder targets automation, predictive maintenance, and AI-driven train dispatching systems. These digital tools are expected to reduce unplanned downtime and improve network resilience in adverse weather.
These initiatives are already showing results: fuel efficiency improved by 3% year-over-year, locomotive reliability reached record levels, and dwell times across key yards declined by 6%. Management expects technology-driven gains to compound in 2026 as new automation platforms are fully deployed. As network velocity continues to improve, CNR’s goal of a sub-60% operating ratio by late 2026 looks increasingly achievable, and potentially sustainable through the cycle.
The TIKR Takeaway
Canadian National continues to show why operational discipline pays off. While broader freight recovery remains gradual, CNR’s focus on service reliability, pricing, and technology-driven efficiency keeps it ahead of most peers. The company’s diversified freight mix, strong capital returns, and clear line of sight to further margin expansion support a constructive long-term outlook.
Investors should watch for sustained intermodal and grain strength into 2026, as well as any signs that automation investments can push the operating ratio below 60%. With balance sheet flexibility and pricing power intact, CNR remains a model of steady, compounding growth.
Should You Buy, Sell, or Hold Canadian National Stock in 2025?
Canadian National combines steady earnings growth, strong free cash flow, and best-in-class efficiency. The path to a sub-60% operating ratio and mid-single-digit EPS growth is credible, underpinned by network modernization and resilient demand across freight categories. While valuation is no longer cheap, the consistency of execution and capital discipline make CNR one of Canada’s most reliable compounders heading into 2026.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
