CN reaches new labor agreement with conductors and engineers

MONTREAL - Canadian National Railway Company (TSX: CNR) (NYSE: CNI), known as CN, a prominent player in the Ground Transportation industry with a market capitalization of $59.3 billion, has finalized a new collective agreement with the Teamsters Canada Rail Conference (TCRC), which represents about 6,000 workers, including conductors, trainees, yard coordinators, and locomotive engineers. According to InvestingPro analysis, the company currently trades near its 52-week low, suggesting potential value opportunity for investors. The three-year contract, effective from January 1, 2024, through December 31, 2026, was confirmed following arbitration and includes a 3% annual wage increase. This development comes as CN maintains impressive gross profit margins of 54.6% and has demonstrated strong shareholder returns with 29 consecutive years of dividend increases.

The arbitrator, William Kaplan, concluded the process that spanned six days of mediation and extensive arbitration. The new terms set forth by Kaplan's ruling do not require further ratification and are now binding. This development comes after the parties were unable to reach a negotiated settlement, a point on which CN expressed disappointment. Nonetheless, the company has expressed its readiness to move forward under the new agreement.

CN has reiterated its commitment to modernizing the collective agreement to benefit its employees, customers, and contribute to the broader North American economy. The company plays a pivotal role in the continent's trade and economic landscape by transporting over 300 million tons of goods annually across its nearly 20,000-mile rail network. InvestingPro data reveals the company operates with moderate debt levels and maintains stable operations with relatively low price volatility, characteristics valued by long-term investors.

The new labor agreement is expected to maintain stability and labor peace for the duration of the contract. This is particularly significant for CN, which has a history dating back to 1919 and is a key player in connecting Canada’s coasts with the U.S. Midwest and Gulf Coast.

While CN has issued forward-looking statements regarding its intentions and outlook, it has cautioned that such statements involve risks, uncertainties, and assumptions, especially under current economic conditions. The company has stated that it does not plan to update these forward-looking statements unless required by securities laws. Notably, InvestingPro reports that 8 analysts have revised their earnings expectations downward for the upcoming period, with the next earnings announcement expected on May 1, 2025. For deeper insights into CN's financial health and future prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

This labor agreement resolution is based on a press release statement from Canadian National Railway Company.

In other recent news, Canadian National Railway Company (CN) reported record-breaking grain transportation figures for March, moving over 2.85 million metric tonnes of grain from Western Canada and achieving a national record of 2.98 million metric tonnes. This accomplishment follows a challenging winter that necessitated train length restrictions due to extreme cold. Additionally, CN has reached a tentative four-year collective agreement with the International Brotherhood of Electric Workers, covering about 750 Signals and Communication employees across Canada. This agreement, pending ratification, is crucial for maintaining stable operations and services.

On the analyst front, Stifel increased its price target for CN to $125, maintaining a Buy rating, while Citi raised its target to $122, also reaffirming a Buy rating. Both firms expressed confidence in CN's potential for earnings growth despite recent challenges. Conversely, JPMorgan reduced its price target to C$174 but maintained an Overweight rating, citing potential for improved performance in 2025. These developments reflect a mix of optimism and caution among analysts regarding CN's future earnings and operational resilience.

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