Rails: You See Them Rollin'? Beats & Raises Forthcoming; Upgrade CNI to OP

Research evidence excerpt

Rails: You See Them Rollin'? Beats & Raises Forthcoming; Upgrade CNI to OP

Transportation | Surface Transportation

June 25, 2026

Jonathan Chappell, CFA Rails: You See Them Rollin'? Beats &

212-497-0827

jonathan.chappell@evercoreisi.com Raises Forthcoming; Upgrade CNI to OP

Alex Johnson The Class I rails are setting up for a 2Q earnings season filled with

212-497-0810 beats and raises as volumes largely accelerated through the period,

alex.johnson@evercoreisi.com fuel surcharges caught up with the material price spikes driving double-

Krystal Song digit revenue growth in many cases, and the long-awaited incremental

212-497-0822 margin expansion associated with productivity and the prior front-

krystal.song@evercoreisi.com loading of resources tempers the margin impact of still-elevated fuel

prices. We are raising our 2Q estimates for 4 of the 5 rails (excluding

CP) by 5-13% and are now above the average Street forecasts for all

5, materially for most (see page 3 for all estimate revisions and where

we stand relative to the Street). The narratives in earnings calls are

likely to focus on the proposed UNP-NSC merger (which is likely to

prevent those stocks from trading as well as they would have otherwise

given our projected upside for both), as well as ongoing volume

momentum amid a tightening trucking market and green shoots of

demand growth. We believe exit rates of volumes (and surcharges) and

associated productivity are likely to result in more favorable 3Q/FY26

guides across the board, with CNI most likely to formally raise its full-

year guidance. With two U.S. rails still caught up in an extended merger

review process, a strong beat and raise by CNI could help further

narrow the wide relative multiple discount at which the stock has traded