And so, Thursday has dawned, and the rumble of train cars carrying commerce all across Canada has largely gone silent. Canadian railroad giant Canadian National (TSE:CNR), along with Canadian Pacific Kansas City (TSE:CP), have locked out a grand total of 9,300 workers. Investors took it well, though, and shares were up fractionally in Thursday morning’s trading.
Don't Miss our Black Friday Offers:
- Discover the latest stocks recommended by top Wall Street analysts, all in one place with Analyst Top Stocks
- Make smarter investments with weekly expert stock picks from the Smart Investor Newsletter
The contract negotiations with the Teamsters Canada Rail Conference, which have been ongoing for the last several weeks now, have apparently gone so far south they can see Bolivia. And that, in turn, prompted Canadian National to go to the lockout phase and keep the workers out of their jobs.
The price tag for such a move is staggering. With the lockout in place, around C$1 billion in daily goods will not be shipped over rail lines, and about 30,000 passengers per day will have to find a new way to get to where they are going, as that service will no longer be available. Meanwhile, the Canadian government is continuing to push for a mutually beneficial bargained solution. However, it is a safe bet that if enough days of billion-dollar losses pass, someone will likely step in and create a solution, bargained or otherwise.
It Turns Out That This Is Nothing New
While this is a calamity by most measures, it turns out that this is not a unique situation or even one that is seen infrequently. A look at the recent past reveals that, just since 2012, there have been five other work stoppage events for Canadian rail companies.
The most recent one was in 2022, and that featured 60 hours of negotiations to get everyone back to work via a tentative contract. A strike in 2019 went eight days before an agreement was reached, and one from 2018 lasted only 18 hours before a solution was found. A two-day strike preceded it in 2015, broken up by a back-to-work bill under the Harper administration, and the strike in 2012 (the longest one) lasted nine days. Thus, historically, it is a safe bet this strike will not last long.
Is CN Rail a Buy or Sell?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on CNR stock based on seven Buys and 14 Holds assigned in the past three months, as indicated by the graphic below. After a 26% rally in its share price over the past year, the average CNR price target of C$181.81 per share implies 17.03% upside potential.
