Canadian National Railway Co (NYSE: CNI)

Sector: Industrials Industry: Railroads CIK: 0000016868
Market Cap 67.54 Bn
P/B 4.29
P/E 19.60
P/S 5.35
ROIC (Qtr) 15.78
Div Yield % 0.00
Rev 1y % (Qtr) 7.67
Total Debt (Qtr) 15.71 Bn
Debt/Equity (Qtr) 1.00
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About

Investment thesis

Bull case

  • Strong tangible asset base of 42.36B provides 2.70x coverage of total debt 15.71B, indicating robust asset backing and low credit risk.
  • Operating cash flow of 5.15B provides strong 9.60x coverage of inventory 535.77M, indicating efficient inventory management.
  • Operating cash flow of 5.15B provides solid 1.91x coverage of current liabilities 2.70B, showing strong operational health.
  • Operating cash flow of 5.15B provides strong 9.46x coverage of operating expenses 543.80M, showing operational efficiency.
  • Retained earnings of 13.81B provide strong 36.17x coverage of intangibles 381.75M, indicating quality earnings retention.

Bear case

  • Operating cash flow of 5.15B barely covers its investment activities of (2.71B), with a coverage ratio of -1.90, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 5.15B provides thin coverage of dividend payments of (1.61B) with a -3.19 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • High financing cash flow of (2.46B) relative to working capital of (894.16M), which is 2.75x suggests concerning dependence on external funding for operational needs.
  • Retained earnings of 13.81B provide limited buffer against comprehensive income items of (778.83M), which is -17.73x, indicating elevated exposure to market risks.
  • Tax assets of 445.99M provide limited offset against tax liabilities of 8.19B, which is 0.05x, indicating potential future cash flow pressure from tax obligations.

Peer comparison

Companies in the Railroads
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 UNP Union Pacific Corp 156.32 Bn 21.90 6.38 32.55 Bn
2 NSC Norfolk Southern Corp 98.17 Bn 49.09 8.45 17.09 Bn
3 CP Canadian Pacific Kansas City Ltd/Cn 77.60 Bn 25.11 7.13 17.31 Bn
4 CSX Csx Corp 76.97 Bn 26.64 5.46 18.87 Bn
5 CNI Canadian National Railway Co 67.54 Bn 19.60 5.35 15.71 Bn
6 WAB Westinghouse Air Brake Technologies Corp 44.42 Bn 37.97 3.98 5.54 Bn
7 TRN Trinity Industries Inc 2.81 Bn 29.44 1.29 5.94 Bn
8 GBX Greenbrier Companies Inc 0.96 Bn -16.79 0.84 1.77 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.45 1.36
EV to Cash from Ops. EV/CFO 12.07 16.53
EV to Debt EV to Debt 3.95 2.59
EV to EBIT EV/EBIT 11.86 7.63
EV to EBITDA EV/EBITDA 9.98 18.51
EV to Free Cash Flow [EV/FCF] EV/FCF 25.10 28.00
EV to Market Cap EV to Market Cap 0.92 1.04
EV to Revenue EV/Rev 4.92 2.75
Price to Book Value [P/B] P/B 4.29 3.50
Price to Earnings [P/E] P/E 19.60 21.48
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 1.56 2.51
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 22.50
Dividend per Basic Share Div per Share (Qtr) 0.00 1.27
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 15.26
Interest Coverage Int. cover (Qtr) 7.86 0.60
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -8.34 -6.16
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -4.85 35.27
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 3.76
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 10.91 17.20
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 10.09 -15.55
EBIT Growth (1y) % EBIT 1y % (Qtr) 11.87 18.03
EBT Growth (1y) % EBT 1y % (Qtr) 12.51 15.09
EPS Growth (1y) % EPS 1y % (Qtr) 13.49 15.15
FCF Growth (1y) % FCF 1y % (Qtr) 13.15 426.49
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 10.62 -4.94
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.22 0.57
Cash Payout Ratio Cash Payout (Qtr) 0.21 0.16
Cash Ratio Cash Ratio (Qtr) 0.10 0.90
Current Ratio Curr Ratio (Qtr) 0.67 1.61
Debt to Equity Ratio Debt/Equity (Qtr) 1.00 1.04
Interest Cover Ratio Int Coverage (Qtr) 7.86 0.60
Times Interest Earned Times Interest Earned (Qtr) 7.86 0.60
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 52.70 -101.68
EBIT Margin % EBIT Margin % (Qtr) 56.82 -107.52
EBT Margin % EBT Margin % (Qtr) 36.20 -114.27
Gross Margin % Gross Margin % (Qtr) 42.40 37.55
Net Profit Margin % Net Margin % (Qtr) 27.30 -117.34