Canadian National Railway (CN) reported a y-o-y decline in revenues and earnings in 2Q 09 as weakened economic conditions impacted transportation volumes, partially offset by the depreciation of the Canadian dollar and lower fuel costs. Despite the poor performance in 2Q 09, we view the company as fundamentally undervalued at current price levels given its strong rail network presence across North America. Hence, we maintain our BUY rating for the common…

We continue to expect declining volumes across all of CN’s segments over our investment horizon due to the current economic slowdown. CN releases its carload data (a measure of volume) on a weekly basis and carloads declined 15.6% y-o-y during 1Q 09, reflecting weak volumes across all its segments. Furthermore, revenue will be negatively impacted by the removal of fuel surcharges in the wake of the reduction in oil prices…

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Canadian National Railway’s (CN) 3Q 08 performance exceeded our expectation given a higher than expected increase in freight rates. Operating expenses were broadly in line with our estimate. Going forward, its revenue growth will benefit from a levy of a fuel surcharge on the company’s 4Q 08 freight rates. In addition, although declining…