Comments on Q1 Earnings
Canadian National Railway Q1 2018 EPS $1.00 (TSE: CNR)
-Expenses rose 9% to $2.16 billion while revenue fell to $3.19 billion.
-Their operating ratio rose to 67.8%, a decrease in efficiency.
-They now expect 2018 adjusted EPS of $5.10 to $5.25 vs. previous estimates between $5.25 and $5.40.
-From BNN, new CN Rail CEO JJ Reust is increasing spending to ease congestion.
-This earnings report from CNR wasn’t great, but one quarter doesn’t define an investment thesis and long-term shareholders shouldn’t fret about short-term results.
-CNR remains a great long-term investment for many reasons, including their railway moat and their history of increasing dividends, most recently 10%.
Constellation Software Q1 2018 EPS $3.90 (TSE: CSU)
-Revenue increased 29% to $719 million and CFO rose 42% $258 million.
-Acquisitions were completed with cash consideration of $320 million.
-From 25iq.com, one can find an insightful post describing business lessons from Mark Leonard (CSI’s CEO).
-Constellation Software remains one of the best investments in Canada and continues to grow through acquisitions.
-You can also read CSI’s annual president’s letter here. This will be their last letter and the company has stopped quarterly conference calls (they view them as unnecessary and one can ask management questions online).
-For a tech company, Constellation hasn’t diluted shareholders at all, something rarely seen in the industry, which is another positive for long term investors.
-The stock is up already over 20% this year, and further gains may prove difficult.
-Investors should also not be discouraged by the ~$900 stock price, and not let price dictate an investment decision. Constellation’s business is ultimately what’s most important and it continues to post impressive metrics.
I hold a position in Canadian National Railway but not Constellation Software.
Please consult a financial advisor before making investment decisions.
This report represents my views, not actionable advice