The railway improved its Q3 operating ratio, but lagging stock performance and tariff-related layoffs cloud the outlook.
Key Numbers
- Q3 2025 Profit: $1.14 billion
- Q3 2025 Operating Ratio: 61.4%
- Management Layoffs: 400 (6% of non-unionized staff)
- Year-to-Date Stock Performance: Down 6%
- Dividend Yield: 2.7%
Canadian National Railway (TSX:CNR)(NYSE:CNI) recently delivered strong third-quarter results with a $1.14 billion profit, even as it navigates a tough freight environment. The company confirmed it is laying off 400 managers as tariffs imposed by the U.S. and Canada cut into freight traffic. Despite the solid operational performance, CN’s stock continues to stagnate, posting a 6% decline year to date.
The railway’s Q3 profit grew from $1.09 billion a year ago, with revenue ticking up to $4.17 billion. A key victory for the company was the improvement in its operating ratio, which tightened to 61.4% from 63.1% last year, signaling strong cost management. This focus on costs was underscored by the layoff announcement, which affects over 6% of its non-unionized workforce. The company stated it is adjusting its headcount to reflect the business environment, as tariffs on goods like steel and lumber dent shipping volumes. The cuts also follow the recent abrupt departure of the company’s chief field operating officer. By focusing on margin improvement, that could help the railway operator improve its bottom line, and win over more investors.
Looking ahead, CN plans to reduce capital expenditures in 2026 to $2.8 billion, down from this year’s $3.35 billion guidance. This financial discipline has yet to reward shareholders; the stock has risen just 3% over the last five years. While CN’s 2.7% yield and improving efficiency are attractive, the lagging stock price and volume pressures suggest this is a holding best suited for patient, dividend-focused investors, as it could take a while before the stock starts to rally, in light of the challenging economic conditions.