The economic research firm based changes in earnings estimates for the Canadian railways on increased volumes and a strong dollar.
According to a statement from the economic research firm Stifel, the company has adjusted its 2015 and 2016 earnings per share estimates for both Canadian National and Canadian Pacific railways.
The firm said in a statement both railways “are benefitting from the West Coast port confusion as shippers have rerouted freight toward the Ports of Vancouver and Prince Rupert.” As a result, year-over-year volumes for the first eight weeks of the quarter have increased 9.6 percent for CN and 2.8 percent for CP.
Due to strong growth in the U.S. and Canadian dollar, however, Stifel has decreased its earnings estimates for CN of $3.78 per share in 2015 and $4.31 per share in 2016 to $3.40 and $3.80, respectively. For 2015 and 2016, Stifel assumes year-over-year pricing growth at CN of 3.9 percent and 3.5 percent and year-over-year volume growth of 4.0 percent and 4.8 percent, respectively.
For CP, the company dropped EPS estimates from $8.88 to $8.52 in 2015 and $11.55 to $10.16 in 2016. For 2015 and 2016, Stifel assumes year-over-year pricing growth at CP of 4.2 percent and 5.9 percent and year-over-year volume growth of 3.0 percent and 5.7 percent, respectively.
“U.S. and Canadian Dollar FX rates are nearing decade highs as the United States continues to maintain slow and steady growth while concern grows over Canada’s heavy reliance on the energy industry to sustain economic growth,” said Stifel’s Transportation & Logistics Research Group. “Adding more uncertainty to the situation is the unknown timeline of the Federal Reserve’s inevitable rate increases, which would likely further propel a stronger dollar.”
Stifel updates EPS estimates for CN, CP
