When you first look at Canadian National's
Well, blame it on the loonie. Canadian National reported revenue growth of 6%, with carload growth of 2% and revenue ton mile growth of close to 5%. What that might suggest, then, is that pricing was weak, and reported revenue per revenue ton mile was up just 1%.
But this is where the loonie comes in -- because of foreign exchange movements, reported revenue was about 5% lower than it would have been in constant-currency terms. So while this is certainly hurting the company, it's not an issue of specific performance as much as circumstances out of the company's control.
And in terms of what the company can control, it continues to perform well. The operating ratio fell again (lower is better) and stands well below the level of even well-run American operators like Burlington Northern
As I see it, the risks at Canadian National are pretty much the same as for the other Class 1 rail operators - namely, that economic growth slows and the railroad companies see a reduction in demand (in terms of carload) and/or less pricing power. Of course, as we've seen for a few quarters now, there's also the risk that ongoing moves in the currency market will mute some of the reported performance for the Canadian operators.
We're not talking about General Electric
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).