cn rail

CANADIAN NATIONAL RAILWAY CO., $84.39, Toronto symbol CNR, operates Canada’s largest freight-rail network. The company also serves 16 U.S. states. CN earned $775 million in the three months ended March 31, 2012. That’s up 16.0% from $668 million a year earlier. Earnings per share rose 20.7%, to $1.75 from $1.45, on fewer shares outstanding. If you exclude one-time items in both years, such as gains on the sale of rail lines in Southern Ontario, earnings per share rose 31.1%, to $1.18 from $0.90. On this basis, CN’s earnings beat the consensus estimate of $1.03 a share....

CANADIAN PACIFIC RAILWAY LTD., $76.45, Toronto symbol CP, reported higher-than-expected earnings this week. In the three months ended March 31, 2012, the company’s earnings soared 317.6%, to $142.0 million from $34.0 million a year earlier. Earnings per share rose 310.0%, to $0.82 from $0.20, on more shares outstanding. That beat the consensus estimate of $0.75 a share. Severe winter weather and avalanches in B.C. delayed the company’s trains and depressed the year-earlier results. This was the main reason for the earnings jump....

PLEASE NOTE: Our next Hotline will go out on Thursday, April 5, 2012. RESEARCH IN MOTION LTD., $14.63, Toronto symbol RIM, earned $418 million, or $0.80 a share, in its fiscal 2012 fourth quarter, which ended March 3, 2012 (all amounts except share price in U.S. dollars). These figures exclude a $346-million (after-tax) writedown of goodwill and a $197-million writedown of inventory of unsold BlackBerry smartphones. On this basis, RIM’s latest earnings fell short of the consensus estimate of $0.81 a share. The latest earnings are also down 55.2% from $934 million, or $1.78 a share, a year earlier....

GENNUM CORP., $13.48, Toronto symbol GND, jumped 119.2% this week after it accepted a $13.55-a-share takeover offer from U.S.-based Semtech Corp. (Nasdaq symbol SMTC). Gennum designs electronic equipment and computer chips that let television broadcasters store, edit and transfer video signals without losing picture quality. It also designs chips that make computer networks faster. The company’s shares are now trading just below Semtech’s offer. This indicates that investors do not expect a higher price. Regulators and Gennum shareholders must still approve the deal, but it should close in April 2012....

CANADIAN NATIONAL RAILWAY CO. $79 (Toronto symbol CNR; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 444.9 million; Market cap: $35.1 billion; Price-to-sales ratio: 4.0; Dividend yield: 1.6%; TSINetwork Rating: Above Average; www.cn.ca) operates the largest freight rail network in Canada. It also serves 16 U.S. states. Ottawa nationalized CN in 1918 because of the vital role the company played in Canada’s early growth. CN became a publicly traded company in 1995. Revenue and earnings look set to rise Railways are highly cyclical, which explains CN’s erratic revenue and earnings history. CN’s revenue fell slightly, from $7.93 billion in 2006 to $7.90 billion in 2007, but rose 7.4%, to $8.5 billion, in 2008. The recession cut revenue by 13.1%, to $7.4 billion, in 2009. But CN’s 2010 revenue surged 12.6%, to $8.3 billion, and its 2011 revenue should rise to around $8.9 billion....

CANADIAN NATIONAL RAILWAY CO. $79 (Toronto symbol CNR; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 444.8 million; Market cap: $35.1 billion; Price-to-sales ratio: 4.0; Dividend yield: 1.6%; TSINetwork Rating: Above Average; www.cn.ca) will buy back up to 5.65 million of its common shares from a private seller, at a discount to their market price. It aims to complete these purchases by March 2012. This is part of CN’s plan to buy back 17 million of its shares, or 3.8% of the total outstanding, by October 27, 2012. Share buybacks raise earnings per share and other per-share calculations, and give the remaining shareholders a larger stake in the company. CN Rail is a buy....

CANADIAN PACIFIC RAILWAY CO., $63.80, Toronto symbol CP, reported higher revenue in its latest quarter. However, earnings fell short of the consensus estimate. In the three months ended September 30, 2011, CP’s revenue rose 4.3%, to $1.34 billion from $1.29 billion. That’s mainly because the company raised its shipping rates and fuel surcharges. In addition, CP shipped more coal and potash during the quarter; that offset lower volumes of manufactured goods and grain. Even with the higher revenue, earnings fell 5.3%, to $186.8 million, or $1.10 a share. That missed the consensus estimate of $1.11 a share. However, costs related to the early repayment of long-term notes cut earnings by $0.04 a share in the latest quarter. A year earlier, the company earned $197.3 million, or $1.17 a share....

RIOCAN REAL ESTATE INVESTMENT TRUST $25 (Toronto symbol REI.UN; Units outstanding: 263.4 million; Market cap: $6.0 billion; Price-to-sales ratio: 6.0; Dividend yield: 5.2%; TSINetwork Rating: Average; www.riocan.com) has interests in 305 shopping malls in Canada, including 10 under development. RioCan also owns stakes in 35 malls in the U.S. through joint ventures. In the first six months of 2011, the trust bought or increased its stake in 16 properties. These purchases cost it a total of $230 million ($139 million in Canada and $91 million in the U.S.). That’s 25.7% more than its cash flow of $183 million, or $0.70 a unit, in the first half of 2011. However, these properties have grocery stores and other major retailers as anchor tenants. That cuts their risk. In the current quarter, RioCan plans to spend $245.9 million to buy or raise its interest in 11 more properties....

Canadian National Railway Co., Toronto symbol CNR, operates Canada’s largest freight-rail network and serves 16 U.S. states. We analyze CN Rail in The Successful Investor, our investment advisory that recommends the best Canadian stocks for conservative investors. In the three months ended June 30, 2011, the Canadian stock’s earnings rose 0.7%, to $538.0 million from $534.0 million. Earnings per share rose 4.4%, to $1.18 from $1.13, on fewer shares outstanding....

CGI GROUP INC., $20.54, Toronto symbol GIB.A, is Canada’s largest provider of computer-outsourcing services. The company’s services can automate certain routine functions, such as accounting and buying supplies. That makes its clients more efficient, and lets them focus on their main businesses. In the three months ended June 30, 2011, CGI earned $118.4 million. That’s up 37.9% from $85.9 million a year earlier. The company spent $56.9 million on share buybacks in the latest quarter. Due to fewer shares outstanding, earnings per share rose 43.3%, to $0.43 from $0.30. If you exclude a tax gain and other unusual items, CGI would have earned $0.38 a share in the latest quarter. That matched the consensus earnings estimate. Revenue rose 15.1%, to $1.04 billion from $901.6 million a year earlier. If you exclude the negative impact of exchange rates, revenue would have risen 18.0%. Canadian revenue fell 6.5%, due to delays in starting up new projects. However, U.S. revenue jumped 54.1%, mainly due to last year’s acquisition of Stanley Inc., which sells computer-outsourcing services to U.S. government agencies. Revenue at CGI’s European operations rose 27.4%....