CNI drops as Q1 revenue slips and operating ratio worsens despite record RTMs
Canadian National Railway shares are sliding after first-quarter 2026 results showed revenue fell 1% to C$4.379 billion and the operating ratio worsened by 120 bps to 64.6%. Investors are reacting to softer adjusted profitability, with adjusted diluted EPS down 3% to C$1.80 as winter-related costs, incidents, and a higher effective tax rate pressured results.
1. What’s moving the stock
Canadian National Railway is down sharply Wednesday after reporting first-quarter 2026 results that showed modest top-line pressure and weaker operating efficiency. Total revenue fell 1% year over year to C$4.379 billion, while the operating ratio rose to 64.6% from a year ago, signaling higher costs relative to revenue. (cn.ca)
2. The key numbers investors are focusing on
CN posted diluted EPS of C$1.87 (up 1%), but adjusted diluted EPS declined 3% to C$1.80, a combination that is typically read as “headline OK, underlying softer.” Operating income decreased 4% to C$1.549 billion, and adjusted operating income decreased 3% to C$1.566 billion. (cn.ca)
3. What drove the margin pressure
The company tied the earnings drag to higher year-over-year costs related to winter conditions, operational incidents, and a higher effective tax rate, even as operating metrics improved and revenue ton miles rose 3% to a first-quarter record. Free cash flow increased to C$900 million, up 44%, but the market focus today is on the cost/tax headwinds and the step-up in the operating ratio. (cn.ca)
4. What to watch next
Management is set to discuss results and outlook on its April 29 conference call, which is likely to drive the next leg of trading as investors look for clarity on whether Q1 cost pressures fade with seasonality and whether pricing/volume can re-accelerate. The stock’s reaction suggests the market wants stronger evidence that operating leverage and margin improvement return in coming quarters. (cn.ca)