CN Rail's 2013 profit forecast disappoints, shares dip

Tue Jan 22, 2013 12:43pm EST
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By Susan Taylor

TORONTO (Reuters) - Canadian National Railway (CNR.TO: Quote), the country's biggest rail carrier, gave a profit outlook for 2013 on Tuesday that fell short of analyst expectations, and its shares slipped even though the company posted higher quarterly earnings and raised its dividend.

The Montreal-based railway forecast its earnings per share in 2013 will grow in the high-single digits, on a percentage basis, a marked slowdown from the past two years.

CN's stock fell 1.3 percent. The shares had powered about 19 percent higher over the past year.

"If you look at the earnings growth that they're calling for, high-single digits," said Raymond James analyst Steve Hansen, "that's down from roughly 16 percent last year, which really does suggest the cycle's maturing a little bit here.

"And that brings in the question what multiple you're willing to pay for the stock," he said.

There have been lofty expectations for CN, which boasts top-notch operating efficiency and trades at 15 times 2012 earnings.

CN's guidance implies 2013 earnings of C$6.11 a share, said BMO Capital Markets analyst Fadi Chamoun, a figure that trailed his earlier forecast of C$6.15 and the mean analyst estimate of C$6.22, according to Thomson Reuters I/B/E/S.

Still, analysts said CN management is typically cautious in its full-year forecasts.   Continued...