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Canadian National Railway (TSE:CNR)
TSX:CNR
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Canadian National Railway
(TSX:CNR)
71Outperform
Positive Factors
Management Strategy
Management appears to be on track to deliver on its strong pipeline of self-help opportunities.
Market Position
Market share appears to have generally recovered to pre-disruption levels.
Negative Factors
Earnings Performance
Canadian National (CNI) reported 4Q EPS of C$1.82, missing the C$1.93 consensus mainly driven by higher operating expenses.
Weather Impact
1QTD volumes are trending below prior estimates due to severe winter weather, resulting in shorter trains, delayed volumes, and cost pressure.
Canadian National Railway (CNR) vs. S&P 500 (SPY)
Market Cap
$86.17B
Dividend Yield2.55%
Average Volume (3M)1.61M
Price to Earnings (P/E)19.6
Beta (1Y)0.77
Revenue Growth1.30%
EPS Growth-18.15%
CountryCA
Employees24,671
SectorIndustrials
Sector Strength63
IndustryRailroads
Share Statistics
EPS (TTM)7.01
Shares Outstanding627,300,000
10 Day Avg. Volume1,447,974
30 Day Avg. Volume1,606,906
Financial Highlights & Ratios
PEG Ratio1.19
Price to Book (P/B)N/A
Price to Sales (P/S)6.73
Price to Cash Flow (P/CF)10.90
P/FCF Ratio17.80
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$168.39Price Target Upside22.58% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering18
Canadian National Railway Business Overview & Revenue Model
Company DescriptionCanadian National Railway Company, together with its subsidiaries, engages in the rail and related transportation business. The company's portfolio of goods includes petroleum and chemicals, grain and fertilizers, coal, metals and minerals, forest products, intermodal, and automotive products serving exporters, importers, retailers, farmers, and manufacturers. It operates a network of 19,500 route miles of track spanning Canada and the United States. The company also provides vessels and docks, transloading and distribution, automotive logistics, and freight forwarding and transportation management services. Canadian National Railway Company was incorporated in 1919 and is headquartered in Montreal, Canada.
How the Company Makes MoneyCanadian 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 shows strong financial health with high profitability and a solid balance sheet. Income stability is evident, though there are declines in net profit margin and cash flow, indicating some pressure on earnings and efficiency.Income Statement
Canadian National Railway's income statement demonstrates strong profitability with a consistent Gross Profit Margin above 40% and an EBIT Margin around 37% in 2024. However, Net Profit Margin showed a decline from 33.4% in 2023 to 26.1% in 2024, indicating pressure on net income. Revenue growth has been modest, with a slight increase in 2024 compared to 2023, but overall stability is maintained.78
Positive
Balance Sheet
The company maintains a healthy balance sheet with a Debt-to-Equity Ratio of approximately 1.01 in 2024, showing a balanced leverage position. The Equity Ratio stands at 36.9%, indicating a solid asset backing. Return on Equity (ROE) declined to 21.1% in 2024 from 27.9% in 2023, reflecting challenges in generating returns for shareholders.72
Positive
Cash Flow
Operating cash flow remains robust, although it saw a slight decrease from 2023 to 2024. Free Cash Flow declined by 16.6% in 2024, influenced by higher capital expenditures. The Free Cash Flow to Net Income Ratio is healthy, indicating efficient cash generation relative to net earnings, although there is room for improvement.75
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 17.05B | 16.83B | 17.11B | 14.48B | 13.82B | Gross Profit |
| 6.97B | 7.15B | 7.40B | 6.07B | 5.77B | EBIT |
| 6.25B | 6.60B | 6.84B | 5.62B | 4.78B | EBITDA |
| 8.63B | 9.03B | 9.07B | 7.61B | 7.65B | Net Income Common Stockholders |
| 4.45B | 5.63B | 5.12B | 4.90B | 3.54B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 389.00M | 475.00M | 328.00M | 838.00M | 569.00M | Total Assets |
| 57.07B | 52.67B | 50.66B | 48.54B | 44.80B | Total Debt |
| 21.37B | 18.89B | 15.77B | 12.81B | 13.22B | Net Debt |
| 20.98B | 18.41B | 15.44B | 11.97B | 12.65B | Total Liabilities |
| 36.02B | 32.55B | 29.28B | 25.79B | 25.15B | Stockholders Equity |
| 21.05B | 20.12B | 21.38B | 22.74B | 19.65B |
| Cash Flow | Free Cash Flow | |||
| 3.15B | 3.78B | 3.92B | 4.08B | 3.30B | Operating Cash Flow |
| 6.70B | 6.96B | 6.67B | 6.97B | 6.17B | Investing Cash Flow |
| -3.61B | -3.47B | -2.51B | -2.87B | -2.95B | Financing Cash Flow |
| -3.62B | -3.41B | -4.67B | -3.86B | -2.71B |
Canadian National Railway Technical Analysis
Negative
137.37
Price Trends
143.54
Negative
146.09
Negative
150.95
Negative
Market Momentum
-0.89
Negative
45.74
Neutral
50.70
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 137.37 is below the 20-day moving average (MA) of 140.12, below the 50-day MA of 143.54, and below the 200-day MA of 150.95, indicating a bearish trend. The MACD of -0.89 indicates Negative momentum. The RSI at 45.74 is Neutral, neither overbought nor oversold. The STOCH value of 50.70 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
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Performance Comparison
TSE:CNR
Canadian National Railway
137.37
-35.93
-20.73%
CP
Canadian Pacific Kansas City
70.19
-17.59
-20.04%
TFII
TFI International
79.46
-78.66
-49.75%
Canadian National Railway Earnings Call Summary
Earnings Call Date: Jan 30, 2025 | % Change Since: -9.22% | Next Earnings Date: May 1, 2025
Earnings Call Sentiment Neutral
The earnings call reflected a challenging 2024 due to significant disruptions, impacting both revenue and operational metrics. However, CN demonstrated resilience and has set a positive outlook for 2025, with strategic initiatives and labor stability contributing to expected EPS growth. The sentiment is cautiously optimistic, with a focus on leveraging new opportunities and recovering from past setbacks.Highlights
Record Canadian Grain Movement
CN moved record amounts of Canadian grain, contributing to a 15% increase in grain RTMs for Q4.
Improved Safety Performance
The company achieved the second-best accident and injury performances in its history.
Positive Outlook for 2025
CN expects 10% to 15% EPS growth for 2025, with a reaffirmed outlook for compound annual high single-digit EPS growth from 2024 to 2026.
Labor Stability Achieved
Reached tentative agreements with major unions representing the Canadian workforce, contributing to a stable labor environment for 2025.
Iowa Northern Transaction Approval
The STB approved the Iowa Northern transaction, extending CN's network reach into the Iowa Green belt.
Lowlights
Significant Disruptions in 2024
Multiple labor and operational disruptions, including strikes at major ports, impacted CN's performance in 2024.
Q4 Revenue and EPS Decline
Q4 adjusted EPS decreased by 10% year-over-year, and revenues dropped 3%.
Operating Ratio Increase
The operating ratio increased by 330 basis points in Q4 to 62.6%, with a full-year increase of 210 basis points to 62.9%.
Challenges in Regaining Intermodal Share
CN struggled to regain U.S. intermodal share following labor disruptions in 2024.
Headwinds in Potash and Forest Products
Potash shipments were down due to a strong 2023 comp and terminal outages, and there was continued softness in forest product demand.
Company Guidance
In the recent conference call, CN provided several key metrics and guidance for 2025. The company aims for a 10% to 15% EPS growth and has reaffirmed its 2024 to 2026 outlook for high single-digit EPS CAGR. For 2025, CN expects low to mid-single-digit RTM growth, with more than 50% of this growth driven by CN-specific initiatives. The operating ratio for Q4 2024 was 62.6%, and the full-year adjusted EPS was $7.10 with an OR of 62.9%. Looking ahead, CN has set a CapEx program of $3.4 billion and announced a 5% dividend increase. The company anticipates margin improvement and has accounted for various scenarios, including potential tariff impacts, while assuming no recession in Canada.Canadian National Railway Corporate Events
Stock BuybackDividendsBusiness Operations and StrategyFinancial Disclosures
CN Reports 2024 Results and Sets Positive Outlook for 2025
Neutral
Jan 30, 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.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.