Canadian National Railway Co. (CNR.TO): 2Q26 EPS Beat; FY26 EPS Growth Guide Raised to MSD-HSD (vs ~MSD Consensus)

Research evidence excerpt

Canadian National Railway Co. (CNR.TO): 2Q26 EPS Beat; FY26 EPS Growth Guide Raised to MSD-HSD (vs ~MSD Consensus)

Goldman Sachs Canadian National Railway Co. (CNR.TO)

efficiently and as volumes recover, we would expect to see better incremental margin

potential.

We note that UNP separately announced yesterday that it reached an agreement

with CN to expand customer opportunities in connection with the merger; this

establishes a framework for CN to secure competitive access, Midwest expansion, and

terminal ownership interests in connection with the proposed UP/NS merger. Under this

agreement (contingent on regulatory approval), CN will gain certain trackage rights and

terminal stakes in exchange for not opposing the merger and collaborating through

the Surface Transportation Board process. CN management noted it excited about the

prospects of furthering its length of haul and gaining additional access into Mexico.

Rating/Price Target/Risks: Our CNR.TO/CNI 12-month price targets are C$182/$132

(from C$169/$122 prior) to reflect a multiple of ~19x (unchanged) applied to updated

Q5-Q8E EPS (C$9.57) and continuing to apply a USD/CAD exchange rate of 1.38

(unchanged). Key upside risks to our Sell rating on CN include: (1) volume/yield

outperformance; grain harvest stronger than the long-run average; (2) margin expansion

above-and-beyond other rails; (3) supply chain congestion rearing back up in the U.S.

and/or worse U.S. rail service metrics, making it harder for U.S. rails to improve

volume/margin as competitors. While we remain Sell rated on CN (we see more upside in

other areas of our coverage), the company has historically shown an ability to operate

Key Takeaways:

n Q2 carload growth at -0.4% YoY; RTMs up ~5% YoY.

n Yield growth (rev/carload) at +12% YoY vs +10% GSe.