Canadian National Railway & Constellation Software

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, 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.┬áThis 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