Fact based stock research
Canadian National Railway (TSX:CNR)

CA1363751027

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For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".

Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".

Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.

Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.

(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).

(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.

Canadian National Railway stock research in summary

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ANALYSIS: With an Obermatt Combined Rank of 33 (worse than 67% compared with investment alternatives), Canadian National Railway (Railroads, Canada) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of Canadian National Railway are low in value (priced high) with a consolidated Value Rank of 35 (worse than 65% of alternatives) and show below-average growth (Growth Rank of 37) but are safely financed (Safety Rank of 58), which means low debt burdens. ...read more

RECOMMENDATION: A Combined Rank of 33, is a hold recommendation based on Canadian National Railway's financial characteristics. As the company Canadian National Railway's critical financial metrics exhibit below-average performance, such as low value (Obermatt Value Rank of 35) and low growth (Obermatt Growth Rank of 37), it is a somewhat questionable stock investment, where the risk of paying too much for the shares is significant, unless the company has an exceptionally bright future. In this case, good financing practices (Obermatt Safety Rank of 58) are a positive sign, because it may allow the company to weather challenging times until the hoped-for cash flows materialize. This may be true for high-tech or biotechnology companies with enough cash to sustain prolonged business development. If they own properties that only provide cash flows in the future, the stock may look excessively expensive and unattractive today. In such cases, the Obermatt Method has limited value, as it is based on facts we can observe today. If the facts lie all in the future, stock investing becomes guesswork, and this should only be a driver in a limited number of investments that account for a small fraction of a safe portfolio. Obermatt Premium subscribers can further check the stock’s Sentiment Ranks, which also flow into the Obermatt 360° View for investors. ...read more

Latest Obermatt Ranks


360° View^new
Sentiment Rank^new
Value Rank	35
Growth Rank	37
Safety Rank	58
Combined Rank	33

Country	Canada
Industry	Railroads
Index	Low Emissions, Low Waste, Recycling, SDG 11, SDG 13, SDG 5, SDG 8, SDG 9, TSX Composite
Size class	X-Large

14-Nov-2024. Stock data may be delayed. Log in or sign up to get the most recent research.

Further information

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Review the performance ranks of the individual metrics that form each investment strategy.

Research History: Canadian National Railway

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	20	29	32	35
GROWTH
GROWTH	37	14	71	37
SAFETY
SAFETY	58	65	53	58
SENTIMENT
SENTIMENT	n/a	43	80	^new
360° VIEW
360° VIEW	n/a	22	73	^new

Most recent update of the stock research: 14-Nov-2024. Financial reporting date used for calculating ranks: 30-Jun-2024. Stock research history is based on the Obermatt Method. The higher the rank, the better Canadian National Railway is in the corresponding investment strategy.
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Combined financial peformance in Detail

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	20	29	32	35
GROWTH
GROWTH	37	14	71	37
SAFETY
SAFETY	58	65	53	58
COMBINED
COMBINED	28	21	47	33

Last update of combined financial performance: 14-Nov-2024. Stock analysis on combined financial performance: The higher the rank of Canadian National Railway the better the performance.

Value Metrics in Detail

ANALYSIS: With an Obermatt Value Rank of 35 (worse than 65% compared with alternatives), Canadian National Railway shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Canadian National Railway. Price-to-Profit (also referred to as price-earnings, P/E) is 53 which means that the stock price compared with what market professionals expect for future profits is lower than for 53% of comparable companies, indicating a good value concerning Canadian National Railway's profit levels. The same is valid for Price-to-Book Capital (also referred to as market-to-book ratio) with a Price-to-Book Rank of 26, which means that the stock price is lower as regards to invested capital than for 26% of comparable investments. On the other hand, Price-to-Sales is less favorable than 93% of alternatives (only 7% of peers have an even less favorable ratio). The same is valid for dividend yield, which is lower than 18% of comparable companies, making the stock more expensive as regards to the company's expected dividend payouts. ...read more

RECOMMENDATION: The overall picture with a consolidated Value Rank of 35, is a hold recommendation based on Canadian National Railway's stock price compared with the company's operational size and dividend yields. This is a puzzling picture, because it means that profits are high while dividends are low. Since the stock price is low compared with invested capital but high in respect to expected revenues, it means that the company has more invested capital than peers for generating the same amount of revenue. Since profits are higher, it could be a "cash cow" situation (using the classic Boston Consulting BCG matrix naming convention) where the company is on a downward trend, still living from the profits of past products. As the company pays low dividends, it may harbor the opinion that a turnaround is possible, and it rather invests the cash than pay it out to shareholders, thus sealing the company's fate early. Any investment optimism should only be a buy trigger once thorough research is completed. We recommend further analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks, including the 360° View, before making an investment decision, which is especially important in this case, as the financial indicators are inconclusive. ...read more

VALUE METRICS	2021	2022	2023	2024
PRICE VS. REVENUES (P/S)
PRICE VS. REVENUES (P/S)	2	6	9	7
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	43	28	34	53
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	6	27	30	26
DIVIDEND YIELD
DIVIDEND YIELD	52	81	80	82
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	20	29	32	35

Last update of Value Rank: 14-Nov-2024. Stock analysis on value ratios: The higher the rank, the lower the value ratio of Canadian National Railway; except for dividend yield where the rank is higher, the higher the yield.

Growth Metrics in Detail

ANALYSIS: With an Obermatt Growth Rank of 37 (better than 37% compared with alternatives), Canadian National Railway shows a below-average growth dynamic in its industry. There is limited momentum in this company. The Growth Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Canadian National Railway. Sales Growth has a rank of 53, which means that, currently, professionals expect the company to grow more than 53% of its competitors. Profit Growth with a rank of 67 is also above average. But Capital Growth has only a rank of 34, and Stock Returns with 21 are also below-average. Stock returns for Canadian National Railway have recently been below 79% of alternative investments. ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 37, is a hold recommendation for growth and momentum investors. Are investors forecasting troubles based on the lack of operating investment activity at the company? This could be one explanation as to why stock returns are low. But stock returns can also be the result of correcting an error in the past, in this case, an overly optimistic outlook on the future, which is now more realistic. The Value Ranks may confirm such a picture. The more important growth indicators are revenues and profits, which are both above average for Canadian National Railway. This is a positive sign from the company's operational side and may give investors courage, despite the poor recent stock price performance. While momentum is a popular investment factor, the value aspect might be the more important one, in the longer term. We recommend analyzing the stock with the Obermatt Value, Safety, and Sentiment Ranks to arrive at a 360° View of the stock purchase case, especially since the growth performance is mixed here. ...read more

GROWTH METRICS	2021	2022	2023	2024
REVENUE GROWTH
REVENUE GROWTH	30	26	59	53
PROFIT GROWTH
PROFIT GROWTH	25	18	67	67
CAPITAL GROWTH
CAPITAL GROWTH	n/a	47	63	34
STOCK RETURNS
STOCK RETURNS	41	45	39	21
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	37	14	71	37

Last update of Growth Rank: 14-Nov-2024. Stock analysis on growth metrics: The higher the rank, the higher the growth and returns of Canadian National Railway.

Safety Metrics in Detail

ANALYSIS: With an Obermatt Safety Rank of 58 (better than 58% compared with alternatives), the company Canadian National Railway has financing practices on the safer side, which mean that their overall debt burden is lower than average. This doesn't mean that the business of Canadian National Railway is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with just one indicator above average for Canadian National Railway. Liquidity is at 76, meaning the company generates more profit to service its debt than 76% of its competitors. This indicates that the company is safer when it comes to debt service. But Refinancing is riskier at a rank of 40, which means that the portion of the debt that is about to be refinanced is above average. It has more debt in the refinancing stage than 60% of its competitors. Leverage is also high at a rank of 48, which means that the company has an above-average debt-to-equity ratio. It has more debt than 52% of its competitors. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 58 (better than 58% compared with alternatives), Canadian National Railway has a financing structure that is safer than that of its competitors. High Leverage (a low Obermatt Leverage Rank) is good in good times, because it usually indicates that shareholders get higher returns. The good Liquidity performance of the company is an indicator that this is the case. However, if you expect an economic downturn, you may stay clear of this stock because they have an above-average debt level that needs refinancing soon. If the company is sailing with good winds, as may be visible from the Growth and Sentiment performance, the refinancing risk may be lower than the low Refinancing rank suggests. ...read more

SAFETY METRICS	2021	2022	2023	2024
LEVERAGE
LEVERAGE	63	62	58	48
REFINANCING
REFINANCING	37	21	37	40
LIQUIDITY
LIQUIDITY	70	78	63	76
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	58	65	53	58

Last update of Safety Rank: 14-Nov-2024. Stock analysis on safety metrics: The higher the rank, the lower the leverage of Canadian National Railway and the more cash is available to service its debt.

Sentiment Metrics in Detail

SENTIMENT	2021	2022	2023	2024
ANALYST OPINIONS
ANALYST OPINIONS	n/a	37	34	^new
OPINIONS CHANGE
OPINIONS CHANGE	n/a	16	40	^new
PRO HOLDINGS
PRO HOLDINGS	n/a	36	92	^new
MARKET PULSE
MARKET PULSE	n/a	92	91	^new
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	n/a	43	80	^new

Last update of Sentiment Rank: 14-Nov-2024. Stock analysis on sentiment metrics: The higher the rank, the more positive the sentiment for Canadian National Railway.
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