Canadian National Stock Falls 4.9% Since Q2 Earnings & Revenue Miss

Canadian National Railway (CNI) reported a disappointing Q2 2025, with EPS of $1.35 flat year-over-year and missing estimates, while revenues declined 2.4% to $3.09 billion, also below expectations, leading to a 4.9% stock drop. Amid weakened freight volumes and pricing across most segments, the company revised its 2025 EPS growth forecast downward to mid to high-single-digits from 10-15% and withdrew its 2024-2026 financial outlook, citing ongoing macroeconomic uncertainty.

Analysis

Canadian National Railway's (CNI) second-quarter 2025 results revealed significant top-line deterioration and a cautious forward outlook, triggering a 4.9% decline in its stock price. The company missed consensus estimates with revenues falling 2.4% year-over-year to $3.09 billion and EPS of $1.35 remaining flat. The revenue weakness was broad-based, with freight revenues declining 1.5% amid volume and pricing pressures; key segments like petroleum, metals, automotive, and intermodal all posted year-over-year revenue declines. A 13% rise in grain and fertilizer revenue provided a partial offset but was insufficient to counter the widespread softening, which is reflective of the stated macroeconomic headwinds. While management demonstrated cost control by reducing operating expenses by 5.2% and improving the operating ratio by 0.5 points to 61.7%, these efficiencies were overshadowed by a significant cut to its full-year 2025 adjusted EPS growth forecast, now a mid to high-single-digit range versus the prior 10%-15%. Most critically, the company completely withdrew its 2024-2026 financial outlook, citing macroeconomic uncertainty and shifting trade policies, signaling a lack of visibility and heightened risk for the medium term.

Key Decisions for Investors

• Investors should re-evaluate their models for CNI to reflect the sharply reduced 2025 EPS growth guidance, which has been nearly halved at the midpoint, and the complete withdrawal of the medium-term outlook.
• Monitor key freight segments like intermodal, automotive, and metals for signs of stabilization or further decline, as their performance is a direct indicator of the macroeconomic pressures cited by management.
• While the active share repurchase program and strong free cash flow generation of C$922 million provide some downside support, these factors must be weighed against the deteriorating revenue environment and increased uncertainty in the company's core operations.