CN Rail Posts Strong 2025 Results but Adopts Cautious Stance for 2026 Amid Trade Uncertainty
Canadian National Railway (CN) concluded a turbulent 2025 on a solid note, delivering strong earnings growth and operational improvements. However, facing what executives termed a "volatile macro environment," the company is taking a more measured, volume-linked approach to its 2026 guidance, underscoring the ongoing challenges posed by trade policy and economic uncertainty.
"We finished the year with solid momentum, driven by reliable service and disciplined execution," said CEO Tracy Robinson. The railway reported a 14% increase in fourth-quarter earnings per share (EPS), bringing full-year growth to 7%, aligning with its mid- to high-single-digit target. A key efficiency metric, the operating ratio, improved to 60.1% in Q4—the best quarterly performance of the year.
Operational highlights were notable. CN achieved its best safety record in company history for both the quarter and the full year. Despite harsh winter conditions in December, the network maintained fluidity, with car velocity improving by 2%. The company also set a Q4 record for fuel efficiency and saw a 14% year-over-year improvement in train and engine productivity.
Commercially, CN navigated a difficult landscape. Revenue ton miles grew by 4% in the quarter, though Chief Commercial Officer Janet Drysdale noted that tariffs, trade volatility, and the repeal of the Canadian carbon tax collectively reduced full-year 2025 revenues by over CAD 350 million. Growth was supported by market share gains, particularly in grain, where CN moved record tonnage from Western Canada for four consecutive months.
Looking ahead, the outlook is deliberately cautious. Management framed 2026 guidance as "directional," closely tied to volume trends which are expected to be "flattish with 2025." This prudence stems from elevated uncertainty surrounding the macro outlook, existing tariffs, and the upcoming review of the U.S.-Mexico-Canada Agreement (USMCA). On this base volume assumption, CN expects EPS growth to "slightly exceed volume growth." Capital spending for 2026 is set at CAD 2.8 billion, a reduction of CAD 500 million from 2025.
In shareholder news, CN announced a 3% dividend increase—its 30th consecutive annual raise—and a new share buyback program for up to 24 million shares. The company plans to temporarily increase leverage to support repurchases before returning to a target ratio of 2.5x by 2027.
Analyst & Investor Commentary:
"The operational execution is undeniable—safety records, productivity gains, cost control. This shows the core franchise is healthy," said Michael Thorne, a portfolio manager at Horizon Capital. "The cautious guidance isn't a surprise given the external noise, but it does signal that top-line growth will be a grind until trade policy clarity emerges."
"Another year of dividend growth and a massive new buyback? That's the real headline for income investors," commented Sarah Chen, an independent retail investor. "It shows confidence in their long-term cash flow, even if the next year is bumpy."
"They're hiding behind 'macro uncertainty' while pulling back on capital investment," argued David Forsythe, a vocal critic and editor of The Transport Ledger. "A CAD 500 million cut in capex? That's not prudence, that's retrenchment. It looks like they're optimizing for short-term shareholder returns at the potential expense of network resilience and future growth. The guidance 'reset' feels like a preemptive excuse for underperformance."
CN Rail, a Class I freight railway with a transcontinental network across Canada and into the central and eastern United States, transports a diverse mix of goods including intermodal containers, grain, forest products, and chemicals.