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Canadian National (CNI) to Expand Via Iowa Northern Buyout

Canadian National CNI announced that it has signed and closed an agreement to acquire Iowa Northern Railway or IANR.  IANR operates approximately 275 track miles in Iowa, connecting to the U.S. rail network of Canadian National.

The transaction, whose terms have not been disclosed, closed into an independent voting trust pending regulatory review by the U.S. Surface Transportation Board (STB). A decision from STB regarding the transaction is expected in 2024.

IANR provides service to the upper Midwest agricultural and industrial markets and covers goods like biofuels and grain. The transaction offers a meaningful opportunity to support growth of local businesses by creating single-line service to North American destinations.

Expressing delight at the transaction, Tracy Robinson, president and CEO of Canadian National, said, “We are delighted to have reached an agreement with Iowa Northern Railway. We look forward to the opportunities our combined network will provide customers, farmers, and our partners to respond to the needs of their existing and new markets. By enabling all of us to play an even more important role in this critical supply chain and densifying our southern network, we are accelerating sustainable, profitable growth.”

This move to buy IANR is a prudent one as it will expand the former’s network considerably in the event of a successful outcome of the STB review. We note that CNI shares have declined 6.5% in a year against the industry’s 0.9% growth.

Zacks Investment Research
Zacks Investment Research


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Headwinds like supply-chain woes, network fluidity challenges and weak intermodal scenario are hurting Canadian National's performance.

Zacks Rank & Key Picks

Canadian National currently carries a Zacks Rank #3 (Hold).

Investors interested in the Zacks Transportation sector may consider some better-ranked stocks like Air Canada ACDVF and SkyWest SKYW.

Air Canada currently sports a Zacks Rank #1 (Strong Buy). An uptick in passenger traffic is aiding ACDVF. Recently, management announced plans to launch a year-round route between Montreal and Madrid. You can see the complete list of today’s Zacks #1 Rank stocks here.

The service will commence in May of the following year as part of its expanded international summer 2024 flying schedule to cater to increased demand. The Zacks Consensus Estimate for current-year earnings has jumped 32.6% in the past 60 days.

SkyWest currently carries a Zacks Rank #2 (Buy). SKYW's fleet modernization efforts are commendable. Initiatives to reward its shareholders also bode well. The Zacks Consensus Estimate for current-quarter earnings has surged 83.3% in the past 60 days.

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Canadian National Railway Company (CNI) : Free Stock Analysis Report

SkyWest, Inc. (SKYW) : Free Stock Analysis Report

Air Canada (ACDVF) : Free Stock Analysis Report

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Zacks Investment Research