Canadian National Railway Company (CNI) is scheduled to report its fourth-quarter 2014 financial numbers after the closing bell on Jan 27.
Last quarter, the company delivered a 2.11% negative earnings surprise. Meanwhile, the company surpassed the Zacks Consensus Estimate in two of the last four quarters, with an average beat of 0.82%. Let’s see how things are shaping up for this announcement.
Factors at Play
The company foresees strong demand across most of its businesses banking on improved consumer confidence in the U.S. and domestic retail markets In addition, pricing should also be favorable. We expect the operating ratio to remain at the current level of around 60% on enhanced productivity from improving system velocity and fuel efficiency. In view of these positives, we believe that the company will be able to achieve its double-digit year-over-year earnings growth projection in 2014.
Uncertainties shrouding the coal market have been a major headwind for Canadian National Railway, particularly resulting in lower export of pet coke. Also, offshore coal export is expected to remain challenged going forward. Lower coal shipments will offset the synergies from other products lines, thus affecting the company’s overall revenues.
Earnings Whispers?
Our proven model does not conclusively show that Canadian National Railway is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or at least 3 for this to happen. Unfortunately, this is not the case here as elaborated below.
Zacks ESP: Earnings ESP represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate. Considering this, the ESP for Canadian National Railway stands at -1.19% as the Most Accurate estimate is pegged at 83 cents while the Zacks Consensus Estimate is higher at 84 cents.
Zacks Rank: Canadian National Railway carries a Zacks Rank #4 (Sell).
Note that Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.th 5) should never be considered going into an earnings announcement.
Stocks to Consider
Here are some companies to consider as our model shows these have the right combination of elements to post an earnings beat this quarter.
Hawaiian Holdings Inc. (HA) with an earnings ESP of +10.53% and a Zacks Rank #1 (Strong Buy).
Allegiant Travel Company (ALGT) with an earnings ESP of +20.57% and a Zacks Rank #1.
Spirit Airlines, Inc. (SAVE) with an earnings ESP of +2.60% and a Zacks Rank #2 (Buy).
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