Good evening all; long time no rant, lol. Once again, in keeping with my fine Canadian heritage, I would like to address the Canadian National earnings "warning" (CNI on the NYSE, CNR on the TSX).
As some of you may know, due to the extreme drought and very bleak outlook for Western crops this year, CEO Paul Tellier announced yesterday that next quarter's earnings would come up about $170 million short, and would be at the lower end of the previously stated 5-10% growth. Keep in mind that grain shipments are vastly subsidized and are at best a break even proposition, so this will probably not affect their profitability very much. Now of greater concern is if their chemical shipments announce slowdowns, as that is the most profitable business unit. BTW, car shipments are money losers.
For you longer time frame investors, CNR has solid support at around $55, so technical downside risk appears to be minimal. However, I am also considering the SEASONALITY of a purchase for a longer term hold: it just doesn't look like a good time to go long for an extended period. Supports can certainly be broken, especially during panic selling. Personally, I am willing to wait a month or two, since the markets tend to be weak during September and October. Nevertheless, CN is on my watchlist, and I will be diving in in the near future, but not just yet; it has nothing to do with the company or management, just a feel for the markets in general.
Good luck to all,
Marc C. |
