CN (TSX: CNR) (NYSE: CNI) Faces Financial Struggles Amidst Revenue Gains

• CN reported an earnings per share (EPS) of C$1.82, below the estimated EPS, reflecting its financial struggles.
• CN exceeded revenue expectations with C$4.35 billion (or $3.02 billion) compared to the estimated C$1.44 billion.

CN (TSX: CNR) (NYSE: CNI) is a major player in the North American rail industry, providing freight transportation services across Canada and the United States. The company operates an extensive rail network, facilitating the movement of goods across the continent. CN competes with other rail giants like Canadian Pacific Railway and Union Pacific Corporation.

On February 4, 2025, CN reported an earnings per share (EPS) of C$1.82, which was below the estimated EPS of C$3.26. Despite this, CN exceeded revenue expectations, reporting C$4.35 billion compared to the estimated C$1.44 billion.

In the fourth quarter of 2024, CN faced several challenges, including a 3% decline in revenue ton miles (RTMs) to 59.3 billion. This contributed to a 3% drop in revenues, amounting to C$4.36 billion. Operating income also decreased by 10% to C$1.63 billion, and the operating ratio increased by 3.3 points to 62.6%, indicating higher operating expenses relative to revenues.

The company's financial metrics reveal further challenges. The enterprise value to operating cash flow ratio is significantly negative at around -53.88, highlighting difficulties in generating cash flow from operations. Additionally, the debt-to-equity ratio is high at about 6.21, suggesting that CN is heavily leveraged, which could impact its financial stability.

Despite these challenges, CN maintains a current ratio of approximately 1.65, indicating a reasonable level of liquidity to cover short-term liabilities. Tracy Robinson, President and CEO, remains confident in the company's momentum as 2025 begins, emphasizing their readiness to drive growth and leverage operations across their system.