Canadian National Railway: Sound of Silence

Research evidence excerpt

Canadian National Railway: Sound of Silence

EPS - 27E (C$) 8.75 9.10 3.9%

direct Ferromex access, with a separate contingent agreement providing

Quarterly Forecasts (FYE Dec)

Kansas City trackage rights upon STB approval of the UP/NS merger. In

Adj. EPS (C$)

exchange, CN granted UP surplus capacity on the EJE around Chicago and 2025A 2026E 2027E

agreed not to oppose the merger. The Mexico corridor opens a ~$3B Canada- Q1 1.85 1.80A 2.10

Mexico truck market for potential rail conversion across all commodities Q2 1.87 2.08A 2.35

Q3 1.83 2.13 2.23

including Auto, Intermodal, Ag, and Energy/Chemicals. Near-term volume Q4 2.08 2.29 2.41

impact is modest with some length-of-haul benefit expected in 2H26 and a full FY 7.63 8.30 9.10

ramp anticipated in 2027 and beyond. The Kansas City access, if and when

triggered, would position CN to compete for new business in a market it Style Exposure

currently cannot serve while providing preferred partner status for 2-to-1 and

3-to-2 shippers identified through the STB remedy process.

• Updated outlook implies modest fundamental lift in 2H26. The long-

awaited full-year EPS guidance lift did not have as strong of an impact on the

stock as some investors expected and we believe breaking down the moving

pieces of the updated guide helps explain the reaction. We estimate that a

stronger than expected 1H26 (+$0.15), YoY tailwinds from fuel in 2H26 (+

$0.45), and FX (+$0.04) represent a +$0.45 contribution to the new guidance.

Assuming the 2026 EPS guide goes from +1% (slightly positive) to +8% (mid-

to-high single digits) for an addition of $0.53, we estimate roughly 20% of the

positive revision would be attributed to an improving outlook in 2H26.

• Neutral, C$182 Dec-27 price target. We are establishing our Dec 2027 PT of