CN Rails Record Quarter|Earnings Beat Meets Wildfire and Merger Crosswinds

The Beat No One Priced In

Canadian National Railway just delivered a second quarter that blew past Wall Street's numbers. Revenue hit four point seven five billion Canadian dollars, up eleven percent from a year ago and well ahead of the four point five six billion analysts expected.

Adjusted diluted earnings per share came in at two dollars and eight cents, an eleven percent jump from last year, driven by record Western Canadian grain volumes and an eleven percent rise in petroleum and chemicals traffic.

CN raised its full-year outlook, now projecting low single-digit growth in revenue ton miles instead of flat growth, and it still expects mid-to-high single-digit adjusted EPS growth for 2026. But the operating ratio ticked up eighty basis points to sixty-two point five percent, a reminder that costs are climbing too.

Wildfire on the Line

Even as the numbers impressed, CN's network faced real disruption. Wildfires in northwestern Ontario forced the railway to suspend operations near Armstrong after a crew's train cab was surrounded by flames, and three trains carrying combustible materials were stopped near Collins First Nation as a precaution.

Yet CN insists the wildfires and looming U.S. tariff threats are not standing in the way of growth. The company says its mainline remains open and it is standing by the upgraded 2026 targets it just delivered alongside the earnings beat.

The Merger CN Didn't Need to Join

In a separate but connected story, CN struck an operating rights agreement with Union Pacific, gaining improved access to the U.S. Midwest and Mexico in exchange for no longer opposing Union Pacific's proposed merger with Norfolk Southern. Union Pacific also gets operating rights around Chicago to the East Coast on CN's network.

Rival BNSF pushed back hard, arguing the CN agreement actually undermines Union Pacific's case. BNSF's Zak Andersen said the deal shows the same benefits can be achieved through partnerships, without a transcontinental merger that would leave one railroad controlling roughly half the market.

Wall Street is responding with fresh conviction. RBC Capital raised its price target on CN to one hundred ninety-five Canadian dollars, citing favourable network dynamics and margin upside, while Evercore ISI upgraded the stock to Outperform ahead of earnings, calling for a material beat and raise that ultimately arrived.

CN backed the growth story with its wallet, declaring a third-quarter dividend of ninety-one and a half cents per share and continuing a streak of annual dividend increases that stretches back three decades. For investors, the message is that despite wildfire disruption and merger politics, CN's underlying business just got stronger.