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1. Company Snapshot

1.a. Company Description

Canadian 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.

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1.b. Last Insights on CNR

Canadian National Railway Company's recent performance was negatively driven by an earnings miss in Q4 2024, with revenue-ton-miles trending down 3.2% year-over-year, below BofA's estimate. Elevated operating expenses and weak liquidity also challenge the company's prospects, as noted by a recent analyst report. Despite its expectation to deliver 10%-15% EPS growth in 2025 and a lifted dividend, the company's current financial situation suggests caution.

1.c. Company Highlights

2. CN Delivers Strong 2025 Performance Amidst Challenging Macro Environment

CN reported a robust financial performance in 2025, with Q4 diluted EPS up 12% year-over-year and adjusted EPS up 14% to $2.05, beating analyst estimates of $1.96. The full-year adjusted diluted EPS was $7.63, up 7% from 2024. Revenue growth was 2% in Q4, driven by strong performance in Intermodal, Grain, and Petroleum & Chemicals. The operating ratio improved to 60.1% in Q4, a 250 basis point improvement over last year, and 61.7% for the full year, a 120 basis point improvement. Free cash flow was over $3.3 billion, up 8% from last year.

Publication Date: Feb -01

📋 Highlights
  • EPS Growth:: Q4 EPS up 14% YoY; full-year adjusted diluted EPS rose 7% to $7.63.
  • Operating Efficiency:: Q4 operating ratio improved 250 bps to 60.1%, full-year 120 bps to 61.7%.
  • Cash Flow Strength:: Generated $3.3B in free cash flow, +8% YoY, with $2B in share repurchases in 2025.
  • Volume & Productivity:: Record Western Canadian Grain shipments and 5% Q4 workload increase despite headwinds.
  • 2026 Outlook:: Flat volumes vs. 2025, EPS growth to exceed volume driven by pricing and productivity, but $350M+ tariff revenue hit expected.

Segment Performance

The company's Grain segment set an all-time annual record for Western Canadian Grain shipments. Intermodal revenue was up, driven by strength in international and domestic segments. Petroleum & Chemicals also contributed to the revenue growth. Janet Drysdale, Chief Commercial Officer, noted that 2026 outlook is challenging, but the company is focused on driving growth in key segments.

Outlook and Guidance

For 2026, CN expects volumes to be flattish with 2025, assuming current tariff levels stay the same. EPS is expected to grow slightly ahead of volumes, driven by continued productivity improvements. Free cash flow is expected to grow, and CN remains committed to returning excess capital to shareholders. The company expects headwinds from mix, tax, other income, and FX, but is confident in its ability to generate double-digit EPS growth in a stabilized environment.

Valuation and Returns

CN's current valuation metrics indicate a P/E Ratio of 17.08, P/B Ratio of 3.74, and EV/EBITDA of 11.2. The company's Return on Equity (ROE) is 21.95%, and Return on Invested Capital (ROIC) is 8.9%. The Dividend Yield is 2.71%, and Free Cash Flow Yield is 4.21%. These metrics suggest that the company is generating strong returns and has a reasonable valuation.

Operational Efficiency

The company has made significant investments in its network, including the Edson Sub and Vancouver corridor, and has reduced structural costs. CN has also achieved a record level of fuel efficiency in Q4 and improved labor productivity. According to Tracy Robinson, "CN has built a more efficient and lean engine, providing operating leverage."

3. NewsRoom

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Déclaration du CN concernant la décision du STB de rejeter l’accord de fusion incomplète de UP et NS

Jan -17

Source: globenewswire.com

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CN Reports November Grain Movement

Dec -08

Source: globenewswire.com

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Bâtir un avenir durable : le CN publie son rapport sur le développement durable

Dec -02

Source: globenewswire.com

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Le CN célèbre avec fierté le 30e anniversaire de sa privatisation

Nov -18

Source: globenewswire.com

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Ghislain Houle, Executive Vice-President and Chief Financial Officer to Address the Desjardins Toronto Conference on November 24

Nov -17

Source:

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Bernstein Raises CNI Price Target to $109.44, Maintains Market Perform Rating

Nov -16

Source:

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Duan Yongping's Strategic Moves: A Closer Look at Berkshire Hathaway Inc's 6.2% Portfolio Impact

Nov -14

Source:

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Assessing Canadian National Railway (TSX:CNR) Valuation After Recent Share Price Dip

Nov -08

Source:

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.40%)

6. Segments

Rail Operations

Expected Growth: 4.4%

Canadian National Railway Company's growth is driven by increasing demand for rail transportation services, investments in digitalization, and a strong pricing environment, leading to a forecast CAGR of 4.4%.

7. Detailed Products

Intermodal

A service that combines rail and truck transportation to move goods in containers, providing a cost-effective and efficient way to transport goods over long distances.

Coal

Transportation of coal from mines to power plants and industrial facilities, supporting the generation of electricity and industrial processes.

Grain

Transportation of grains such as wheat, barley, and oats from farms to processing facilities, supporting the agricultural industry.

Forest Products

Transportation of forest products such as lumber, pulp, and paper from mills to manufacturing facilities, supporting the forestry industry.

Automotive

Transportation of finished vehicles and automotive parts from manufacturing facilities to dealerships and distribution centers, supporting the automotive industry.

Chemicals

Transportation of chemicals and hazardous materials from manufacturing facilities to industrial customers, supporting the chemical industry.

Petroleum and Chemicals

Transportation of petroleum products such as crude oil, refined fuels, and chemicals from production facilities to refineries and distribution centers, supporting the energy industry.

Metals and Minerals

Transportation of metals and minerals such as iron ore, copper, and nickel from mines to smelters and manufacturing facilities, supporting the mining industry.

8. Canadian National Railway Company's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Canadian National Railway Company is low due to the high barriers to entry and the lack of viable substitutes for rail transportation.

Bargaining Power Of Customers

The bargaining power of customers for Canadian National Railway Company is medium due to the presence of large industrial customers who can negotiate better rates, but the company's diversified customer base and lack of dependence on a single customer mitigate this power.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Canadian National Railway Company is low due to the company's large scale of operations and its ability to negotiate better prices with suppliers.

Threat Of New Entrants

The threat of new entrants for Canadian National Railway Company is low due to the high barriers to entry, including the need for significant capital investment and regulatory approvals.

Intensity Of Rivalry

The intensity of rivalry for Canadian National Railway Company is high due to the presence of strong competitors in the rail industry, including Canadian Pacific Railway, and the ongoing competition for market share and customers.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 48.42%
Debt Cost 4.41%
Equity Weight 51.58%
Equity Cost 7.26%
WACC 5.88%
Leverage 93.89%

11. Quality Control: Canadian National Railway Company passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
PACCAR

A-Score: 6.0/10

Value: 4.1

Growth: 6.7

Quality: 5.0

Yield: 8.0

Momentum: 4.0

Volatility: 8.3

1-Year Total Return ->

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Stock-Card
Norfolk Southern

A-Score: 5.6/10

Value: 2.7

Growth: 4.7

Quality: 5.8

Yield: 4.0

Momentum: 7.0

Volatility: 9.7

1-Year Total Return ->

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Stock-Card
CN Rail

A-Score: 5.6/10

Value: 3.3

Growth: 5.1

Quality: 6.5

Yield: 5.0

Momentum: 4.0

Volatility: 10.0

1-Year Total Return ->

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Stock-Card
Union Pacific

A-Score: 5.5/10

Value: 2.8

Growth: 4.9

Quality: 6.5

Yield: 4.0

Momentum: 5.0

Volatility: 10.0

1-Year Total Return ->

View Full Report
Stock-Card
Canadian Pacific Railway

A-Score: 5.2/10

Value: 3.0

Growth: 5.4

Quality: 6.4

Yield: 2.0

Momentum: 5.0

Volatility: 9.7

1-Year Total Return ->

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Stock-Card
Wabtec

A-Score: 5.1/10

Value: 2.9

Growth: 6.6

Quality: 6.6

Yield: 0.0

Momentum: 6.0

Volatility: 8.7

1-Year Total Return ->

View Full Report

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

130.79$

Current Price

130.79$

Potential

-0.00%

Expected Cash-Flows