Canadian National: Investor Day Features Solid Growth Opportunities, but Capital Spending Could Jump

Canadian National held an investor day during which management highlighted its reinvigorated focus on precision scheduled railroading over the past year, under new CEO Tracy Robinson and with help from hiring railroading veteran Ed Harris as COO. We believe the PSR playbook took somewhat of a back seat in previous years, as the rail focused to a greater degree on top-line growth—a dynamic that likely tempered operating efficiency. However CN's return to a more disciplined "scheduled operating plan" seems to have made a difference (lifting velocity and asset utilization) considering its adjusted operating ratio improved 130 basis points in 2022—despite labor constraints and wage inflation—thus narrowing the gap relative to peers.