Canadian National Railway (CNR) AI Stock Analysis

• Market Cap: $92.01B
• Dividend Yield: 2.43%
• Average Volume (3M): 1.18M
• Price to Earnings (P/E): 20.9
• Beta (1Y): 0.85
• Revenue Growth: 1.30%
• EPS Growth: -18.15%
• Country: CA
• Employees: 24,987
• Sector: Industrials
• Sector Strength: 64
• Industry: Transportation
• EPS (TTM): 7.01
• Shares Outstanding: 627,300,000
• 10 Day Avg. Volume: 1,339,964
• 30 Day Avg. Volume: 1,176,669
• PEG Ratio: 1.19
• Price to Book (P/B): N/A
• Price to Sales (P/S): 5.42
• Price to Cash Flow (P/CF): 12.70
• P/FCF Ratio: 20.50
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: C$168.04
• Price Target Upside: 17.86% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 19

Canadian National Railway's financial performance shows strong fundamentals despite recent pressures on margins and cash flow. The technical analysis suggests caution with bearish signs but no immediate oversold risks. Valuation is fair with a stable dividend yield. The earnings call provides optimism with strategic growth plans and labor stability contributing positively to future performance.

Positive Factors

Earnings Growth Outlook

Management reiterated its high-single digit adjusted EPS CAGR target for 2024-2026 driven by company-specific growth opportunities, pricing above rail inflation, and continued margin improvement.

Growth Initiatives

More than 50% of the anticipated RTM growth is from CNI-specific initiatives with another one-third related to the recovery of volumes lost due to last year’s labor disruptions.

Negative Factors

Operating Expenses

Adjusted operating expenses exceeded our estimate by C$76M driven mainly by higher-than-expected labor and other costs.

Canadian National Railway Business Overview & Revenue Model

Company Description

Founded in 1919, Canadian National Railway Co. is a Canada-based company which is engaged in rail and related transportation business. Its services include rail, intermodal, trucking, supply chain services, business development, and maps and network. The company offers its services in industries including automotive; coal; fertilizer; food and beverages; forest products; dimensional loads; grain; metals and minerals; and petroleum and chemicals.

How the Company Makes Money

Canadian National Railway generates revenue primarily through its rail transportation services, which account for the bulk of its income. The company charges customers for transporting goods across its extensive rail network, which includes fees based on distance, weight, and type of cargo. CNR also benefits from intermodal services, where it integrates rail with trucking to provide seamless door-to-door delivery solutions. Additional revenue streams include logistics services such as freight forwarding, warehousing, and distribution, which add value by offering comprehensive supply chain solutions. Strategic partnerships with major ports and integration with other modes of transport enhance CNR's service offerings and contribute to its earning potential. Moreover, CNR capitalizes on the movement of bulk commodities like grain, oil, and minerals, where rail remains a cost-effective and efficient transportation mode.

Canadian National Railway Financial Statement Overview

Summary

Canadian National Railway exhibits a strong financial profile with robust profitability, moderate leverage, and healthy cash flows. The company demonstrates efficient operations and strategic use of its capital structure to maintain growth and stability. While the debt level is notable, it is balanced by solid equity and strong cash generation capabilities. The financial statements suggest a well-managed company with a positive growth trajectory in the transportation industry.

Income Statement

The income statement demonstrates strong profitability and growth. The TTM gross profit margin is approximately 42.7%, and the net profit margin is 31.2%, indicating efficient cost management and profitability. Revenue growth from the previous year is notable at 10.8%. The EBIT and EBITDA margins, at 37.8% and 45.3% respectively, further underscore operational efficiency. Overall, the income statement reflects a robust financial performance with consistent growth and high margins.

Balance Sheet

The balance sheet shows a solid equity position with a debt-to-equity ratio of 1.08, indicating a moderate level of leverage. The equity ratio stands at 35.7%, providing a stable capital structure. Return on equity (ROE) is strong at 29.9%, reflecting high profitability relative to shareholder investment. While the company maintains a substantial amount of debt, the balance between debt and equity is managed effectively, supporting growth without excessive risk.

Cash Flow

Cash flow statements reveal strong operational cash flows, with an operating cash flow to net income ratio of 1.29, indicating efficient cash generation from operations. Free cash flow remains steady, with a small decrease from the previous period, resulting in a slight decline in free cash flow growth rate. The free cash flow to net income ratio of 0.65 suggests a good conversion of net income to free cash flow, supporting ongoing investments and shareholder returns.

Breakdown
TTM	Dec 2023	Dec 2022	Dec 2021	Dec 2020	Dec 2019
Income Statement		Total Revenue
18.64B	16.83B	17.11B	14.48B	13.82B	14.92B
	Gross Profit
7.96B	7.15B	7.40B	6.07B	5.77B	6.08B
	EBIT
7.05B	6.60B	6.84B	5.62B	4.78B	5.59B
	EBITDA
8.45B	9.03B	9.07B	7.61B	7.65B	8.00B
	Net Income Common Stockholders
5.82B	5.63B	5.12B	4.90B	3.54B	4.22B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
475.00M	475.00M	328.00M	838.00M	569.00M	64.00M
	Total Assets
52.67B	52.67B	50.66B	48.54B	44.80B	43.78B
	Total Debt
18.89B	18.89B	15.77B	12.81B	13.22B	14.30B
	Net Debt
18.41B	18.41B	15.44B	11.97B	12.65B	14.23B
	Total Liabilities
32.55B	32.55B	29.28B	25.79B	25.15B	25.74B
	Stockholders Equity
20.12B	20.12B	21.38B	22.74B	19.65B	18.04B
Cash Flow		Free Cash Flow
3.77B	3.78B	3.92B	4.08B	3.30B	2.06B
	Operating Cash Flow
7.51B	6.96B	6.67B	6.97B	6.17B	5.92B
	Investing Cash Flow
-4.04B	-3.47B	-2.51B	-2.87B	-2.95B	-4.19B
	Financing Cash Flow
-3.73B	-3.41B	-4.67B	-3.86B	-2.71B	-1.90B

Canadian National Railway Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 142.58
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:CNR, the sentiment is Negative. The current price of 142.58 is below the 20-day moving average (MA) of 145.66, below the 50-day MA of 147.05, and below the 200-day MA of 155.11, indicating a bearish trend. The MACD of -1.05 indicates Positive momentum. The RSI at 40.90 is Neutral, neither overbought nor oversold. The STOCH value of 25.86 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:CNR.

Canadian National Railway Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CNR	71 Outperform	$92.01B	20.92	21.13%	2.43%	1.30%	-18.15%
Sector *	62 Neutral	$8.39B	13.57	1.15%	2.98%	3.82%	-14.84%

Canadian National Railway Corporate Events

CN Reports 2024 Results and Sets Positive Outlook for 2025

Canadian National Railway announced its financial results for the fourth quarter and year-end of 2024, reporting a decrease in revenue and earnings compared to 2023. Despite these declines, CN remains optimistic about its growth prospects, projecting a 10%-15% EPS growth in 2025 and planning a C$3.4 billion capital investment. The company also continues its commitment to shareholder returns with a 5% increase in quarterly dividends and a new share repurchase program.