Class 1 Rail Q12025 Earnings Wrap up
The results are in. Union Pacific (NYSE:UNP), CSX Corp. (NASDAQ: CSX), Norfolk Southern (NYSE:NSC), CN Rail (TSX:CN), and Canadian Pacific (TSX:CPKC) all recently reported their Q1 2025 results.
Impressing was Norfolk Southern, CN, and CPKC who beat on EPS by $0.03, $0.07, & $0.02 respectively. The lone underperformer was CSX, which had EPS fall by over 30% from the same period last year. An analysis of each operator’s first quarter will be provided below.
Earnings
|
Railroad |
Actual EPS |
Consensus EPS |
Beat (Miss) |
Q1 2024 |
Percentage Change |
|
Union Pacific |
$2.70 |
$2.74 |
(0.04) |
$2.69 |
0.37% |
|
CSX |
$0.34 |
$0.37 |
(0.03) |
$0.45 |
-24.44% |
|
Norfolk Southern |
$2.69 |
$2.66 |
0.03 |
$2.49 |
8.03% |
|
Canadian National* |
$1.85 |
$1.78 |
0.07 |
$1.72 |
7.56% |
|
Canadian Pacific Kansas City* |
$1.06 |
$1.04 |
0.02 |
$0.93 |
13.98% |
Revenue
|
Railroad |
Actual Revenue (Billions) |
Consensus Revenue |
Beat (Miss) |
Q1 2024 |
Percentage Change |
|
Union Pacific |
$6.03 |
$6.07 |
-$0.04 |
$6.03 |
0.00% |
|
CSX |
$3.42 |
$3.45 |
-$0.03 |
$3.68 |
-7.07% |
|
Norfolk Southern |
$2.99 |
$2.97 |
$0.02 |
$3.00 |
-0.33% |
|
Canadian National* |
$4.40 |
$4.36 |
$0.04 |
$4.25 |
3.53% |
|
Canadian Pacific Kansas City* |
$3.80 |
$3.75 |
$0.05 |
$3.52 |
7.95% |
Source: Company Quarterly Financial Reports, MT Newswire
*Reporting in CAD
Union Pacific (NYSE:UNP)
Union Pacific had a mixed Q1, as their Revenue and EPS were more or less flat YoY, and they slightly missed consensus on both metrics. In addition, their operating ratio was also flat at 60.7%. In their earnings call the management team leaned on the 2024 leap year to justify some of the shortcomings.
The biggest positive to note from this release was that freight revenue was up 4% excluding fuel surcharges, which was mostly due to increased volumes. Core pricing was also very strong despite an unfavorable mix, reaching the highest quarterly level in the past ten years.
Overall, it was important for UNP to reaffirm guidance especially in the current environment. We believe Q2 will be a better quarter for UNP, and they still are our favorite class 1 as they continue to have industry leading OR and ROIC, as well as the best positioned network.
CSX Corp. (NASDAQ: CSX)
CSX had a very tough Q1 2025, as Total Volume (-1%), Total Revenue (-7%) , and EPS (-24%), all decreased YoY. CSX has been forced to reroute much of its daily traffic due to two major infrastructure projects. On top of that, bad weather hampered CSX’s efficiency throughout Q1, leading to an abysmal 69% Carload trip plan compliance.
Cited above, the two infrastructure projects that are effecting CSX’s operations currently are the Howard Street Tunnel reconstruction in Baltimore, and the Blue Ridge Subdivision in North Carolina that needs to be reconstructed due to Hurricane Helene last year. The tunnel reconstruction in Baltimore once complete will allow passage of double stacked trains once complete – which should boost efficiency in their network going forward.
For FY 2025 CSX management still expects overall volume growth from the year prior. Management also commented that as the infrastructure projects advance, service reliability and network efficiency will stabilize. The next few quarters will provide more insight.
Norfolk Southern (NYSE:NSC)
Norfolk Southern delivered a strong Q1 2025. It was great to see them start the year with more ‘normal’ numbers as last year’s Q1 was impacted heavily from the Ohio derailment. Net income was $750 million compared to $53 million a year ago. Revenue was essentially flat but it beat analyst estimates.
The company also resumed share repurchases, buying back $250 million this quarter. This was welcoming news for investors as it shows that management now feels that the worst of the Ohio incident is behind them -as they are able to allocate excess capital back to more favorable use cases for shareholders.
Norfolk Southern reaffirmed full-year guidance of 3% revenue growth, and are targeting a 150 basis point improvement in the company’s OR. This will be massive for NSC as its OR is among the worst of the class 1 rail’s and we think if it comes to fruition the stock will outperform.
CN Rail (TSX:CN)
Canadian National Railway had a solid Q1 2025. The company had a 3.5% growth in revenue, and a 7.5% growth in EPS. In addition, CN had improved operational efficiency and cost control, resulting in a slight improvement in operating ratio.
During the earnings call, management really emphasized CN’s tight cost discipline in the quarter. This helped mitigate the impact of winter conditions which were closer to the long term norm – as the previous two winter seasons were milder than normal. CN implements three tiers of train length and speed restrictions at temperatures below 25 degrees Celsius – impacting car velocity. These restrictions came into play frequently in February even in the east, which is something they didnt have to deal with as often in the prior year. Despite this CN was still able to show solid numbers which was very encouraging.
CN plans to resume share buybacks next quarter, which is something that investors will keep an eye on for Q2 results. One thing to keep an eye on is that CN hinted that FY revenue and earnings growth would happen in the back half of the year. This could mean that Q2 may be weaker than expected.
Canadian Pacific (TSX:CP)
CPKC had a great start to the year as revenue rose 8% and EPS climbed 14%. More notably, CPKC’s operating ratio improved to 65.3%, compared to 67.4% a year ago. Improvements also came as volumes measured in revenue ton-miles, increased 4% in the quarter. The cherry on top was the 4% share buyback program announced.
CPKC has adjusted its full-year 2025 earnings growth guidance due to trade policy uncertainty and currency fluctuations. The company now expects core diluted EPS growth to be in the 10-14% range, which is still solid.
There were many drivers to the strong quarter, but we want to highlight growth across a large portion of their freight mix. Grain revenue was up 4% with a 3% increase in volume. Potash revenue up 10% with an 8% increase in volume. Coal revenue surged 21% with a 10% rise in volume. Automotive revenue up 18% and volume up 24%. On top of all of this domestic intermodal volume increased by 8%.
Key Takeaways
- CPKC and Norfolk Southern outperformed
- CSX and Union Pacific underperformed
- CN Delivered solid results but saw little stock movement
Market sentiment and corresponding stock performance of Class I rails in early Q2 2025 has been highly sensitive to earnings surprises, and operational outlooks. CPKC and NSC were notably rewarded for exceeding expectations and returning capital to shareholders which reflected in their stock prices.
