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MONTREAL - Canadian National Railway Co. (TSX: TSX:CNR) (NYSE: CNI), one of North America's largest transportation and logistics companies with a market capitalization of $67 billion, has reached a tentative four-year collective agreement with the International Brotherhood of Electric Workers (IBEW), the company announced Monday. The IBEW represents about 750 Signals and Communication employees at CN across Canada. According to InvestingPro analysis, CN maintains impressive gross profit margins of 55% and has consistently raised its dividend for 29 consecutive years, demonstrating strong operational efficiency and shareholder commitment.
The agreement, if ratified, will succeed the prior collective agreement that expired on December 31, 2024. CN has not released the details of the tentative agreement to the public, pending ratification by the union members. The ratification process is an internal union matter, and the outcome will determine if the agreement comes into effect.
This development is significant for CN, which plays a critical role in the North American economy by transporting over 300 million tons of goods annually. The company's nearly 20,000-mile rail network is instrumental in connecting Canada's coasts with the U.S. Midwest and the Gulf of Mexico, facilitating sustainable trade and contributing to the prosperity of the communities it serves.
The tentative agreement with the IBEW is a key step in ensuring the continuity of CN's operations and services. Stable labor relations are crucial for CN, particularly given the essential nature of rail transport in the supply chain and the potential impact of disruptions on the economy. With the company's next earnings report due in just two days, InvestingPro subscribers can access comprehensive analysis including 15 additional ProTips and detailed financial metrics to evaluate CN's performance. The company's stock is currently trading near its 52-week low, presenting an interesting situation for investors looking to conduct thorough due diligence.
The news of the tentative agreement comes directly from a press release statement issued by CN. The company, founded in 1919, has a long history of providing transportation services and has been a cornerstone of trade across North America.
Investors and stakeholders in the transportation sector will be watching closely to see if the agreement is ratified, as a positive outcome would likely support CN's commitment to providing uninterrupted service to its customers. The ratification results are awaited to confirm the new labor contract that will guide the relationship between CN and its Signals and Communication employees for the next four years. Based on InvestingPro's Fair Value calculations, CN appears slightly undervalued, with a 'GOOD' overall financial health score, making it an interesting case study in the transportation sector. Detailed analysis and a comprehensive Pro Research Report are available for subscribers, offering deeper insights into CN's financial position and growth prospects.
In other recent news, Canadian National Railway has been the subject of several analyst upgrades. Stifel upgraded the company's stock from Hold to Buy, noting the potential for growth in 2025. Similarly, Jefferies raised its rating from Hold to Buy, citing a favorable business climate that could stimulate demand for transportation and logistics services. Evercore ISI also increased its rating to Outperform, while Citi upgraded the stock from Neutral to Buy, based on the potential for a high single-digit earnings per share compound annual growth rate through 2027.
Canadian National Railway's financial performance has shown resilience despite recent challenges. The company reported a 2% increase in earnings per share year-over-year, reaching $1.72 in the third quarter of 2024. Revenue also increased by 3%, driven by long-haul intermodal and refined petroleum products. However, the company's Q4 revenues are expected to fall by 2.3% to $4,370m CAD due to disruptions.
In addition to these financial highlights, Canadian National Railway has reached a new labor agreement with Unifor, expected to provide stability and support for its continued commitment to safe and efficient transport services. These developments indicate a positive trajectory for the company, as it continues to navigate a complex market landscape.
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