Overview
Benchmark on Monday left its rating on Canadian National Railway at Hold after the company released fourth-quarter results that modestly outperformed analyst forecasts. Trading data cited in company research show the stock changing hands near $94.12, close to its 52-week low of $90.74, and analysis indicates the share price may sit below certain Fair Value estimates.
Quarterly results and margins
Canadian National reported adjusted fourth-quarter earnings per share of C$2.08, exceeding the consensus estimate of C$1.98. The operator also continues to report strong profitability metrics, with gross profit margins at 56.47%, a figure the company presents as evidence of operational efficiency.
Guidance and outlook for 2026
Despite the quarterly beat, company management issued a cautious outlook for full-year 2026. Management expects revenue ton miles (RTMs) to be flat on a year-over-year basis, a notable downgrade from earlier consensus expectations of 2% growth. The company projects earnings per share to rise only slightly above volume levels, which falls short of a prior consensus forecast of 6% EPS growth.
Over the last twelve months the company has recorded modest revenue growth of 1.51%, but the guidance implies a more restrained top-line trajectory for the coming year.
Margin headwinds and capital allocation
Canadian National identified several near-term pressures on margins for the upcoming year. These include an unfavorable business mix, an approximately C$100 million reduction in capital credits, a higher expected effective tax rate in the range of 25% to 26%, and lower other income. To offset some shareholder concerns on capital allocation, the company unveiled a 24 million share buyback program and indicated plans to execute it aggressively; management cautioned, however, that the buyback would be only slightly accretive to earnings given the company's debt levels and prevailing interest rates.
Valuation and shareholder returns
Data referenced by the company show Canadian National trading at a price-to-earnings ratio of 17.3 and offering a dividend yield of 2.67%. The company has increased its dividend for 30 consecutive years, a point highlighted in the firm's research materials. Canadian National’s market capitalization stands at $58.06 billion, underpinning its role as a major participant in ground transportation.
M&A and regulatory considerations
On the proposed transcontinental merger front, Canadian National reiterated its position that the current structure of the combination would require significant concessions, suggesting the company believes material changes would be necessary for approval or acceptable terms.
Additional recent developments
Separately, the company reported what it described as a strong fourth quarter for 2025, with EPS up 14% quarter-over-quarter and full-year EPS up 7%. The adjusted EPS of C$2.08 outpaced Stephens’ estimate of C$1.97 and the broader consensus of C$1.98. Canadian National also posted an adjusted operating ratio of 60.1%, better than forecast figures of 61.9% and 61.4%.
Despite those outperformance metrics, Stephens revised its price target on the shares from $105.00 to $100.00, citing a muted volume outlook for 2026 while retaining an Equal Weight rating. In related corporate communications, Executive Vice-President and Chief Financial Officer Ghislain Houle is scheduled to speak at Citi’s 2026 Global Industrial Tech and Mobility Conference; the presentation will be available on the company’s website via a live webcast, with a replay accessible afterward.
Interpretation
The company’s results show operational strength in profitability and an earnings beat in the quarter, but management’s cautious 2026 guidance, a slate of identified margin pressures, and a tempered view from some analysts have led ratings firms to remain conservative on the shares. The announced buyback and a long history of dividend increases offer some support for shareholder returns, but management’s own comments highlight limited near-term accretion given the current balance sheet and interest rate environment.
Note: The article presents company-reported figures and analyst actions as stated by the firm and referenced research.