Canadian National Railway (NYSE: CNI) shares rose over 2% after the company raised its full-year financial outlook, driven by a pickup in freight demand and shifting macroeconomic conditions.

The railway operator reported higher second-quarter profit and revenue compared to the same period last year, leading to an upgraded forecast for the remainder of 2026.

Key Forecast Revision

On Friday, Canadian National Railway updated its annual expectations, citing changes in freight activity and the broader economic environment. The company now expects revenue ton-miles—a core measure of rail freight volume—to grow by a low single-digit percentage in 2026. This is an improvement from its previous forecast of flat volume growth.

The company also adjusted its currency outlook, now predicting the Canadian dollar will average 0.71 U.S. dollars for the full year, weaker than its April estimate of 0.73 U.S. dollars.

However, Canadian National Railway cautioned that macroeconomic volatility, geopolitical conflicts, and escalating global trade tensions could introduce greater uncertainty to freight demand moving forward.

Second-Quarter Financial Results

For the second quarter, Canadian National Railway reported net income of C$1.25 billion (US$887.4 million), or C$2.06 per share, compared to C$1.17 billion, or C$1.87 per share, in the same period last year.

Adjusted earnings per share, which exclude one-time costs and special items, came in at C$2.08. Analysts polled by FactSet had expected C$1.96, meaning the company beat consensus estimates.

Total revenue rose 11% year-over-year to C$4.75 billion, surpassing the analyst forecast of C$4.63 billion. Freight revenue increased to C$4.56 billion from C$4.09 billion a year earlier.

Revenue ton-miles for the quarter improved 5% to 62.25 billion.

The company's operating ratio, a key measure of efficiency, stood at 62.5%, up 80 basis points from the previous quarter. The adjusted operating ratio was 62.2%, a 50 basis point increase. A lower operating ratio indicates higher efficiency and profitability, so the rise suggests a slight increase in the cost-to-revenue ratio.

Strategic Partnerships

Earlier this week, Canadian National Railway announced two commercial agreements with Union Pacific Railroad. The partnerships aim to expand cross-border freight capacity in North America and improve overall rail network efficiency. This move is part of Canadian National Railway's strategy to strengthen its north-south freight corridor and deepen cooperation with U.S. rail operators. One of the agreements includes a commitment from Canadian National Railway not to obstruct Union Pacific’s proposed merger with Norfolk Southern Railway.