Canadian National Railway Company CNI is set to release first-quarter 2015 financial results after the market closes on Apr 20, 2015.
In the last quarter, the company delivered a positive 7.14% earnings surprise. Let’s see how things are shaping up for this announcement.
Factors at Play this Quarter
Despite favorable rail industry pricing, improving operational efficiency, and the expansion of network and terminal capacity, Canadian National Railway remains highly susceptible to changes in oil prices and lower coal demand.
Moreover, railway carriers face intense competition from various transportation providers including railroads, motor carriers, barges and ships that operate along similar routes across its service area. Hence, low oil prices will help these transport companies, especially trucking companies, offer attractive rates to clients, thereby making rail companies lose significant amount of business.
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 (Strong Buy), #2 (Buy) or at least #3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below.
Zacks ESP: The Most Accurate estimate and the Zacks Consensus Estimate are poised at 68 cents. Hence, the ESP is 0.00%.
Zacks Rank: Canadian National Railway carries a Zacks Rank #3. While this increases the predictive power, we also need to have a positive ESP to be confident of an earnings surprise.
Meanwhile, we caution against stocks with a Zacks Rank #4 and #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies you may want to consider as our model shows these have the right combination of elements to post an earnings beat this quarter.
Ryder System, Inc. R has an earnings ESP of +3.96% and a Zacks Rank #2.
Virgin America Inc. VA has an earnings ESP of +7.14% and carries a Zacks Rank #3.
United Continental Holdings, Inc. UAL has an earnings ESP of +4.29% and a Zacks Rank #3.
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