Recommendation: Buy
| Entry Date | Symbol | Recommendation | Entry Price (USD) | Target 1 (USD) | Target 2 (USD) | Holding Duration | Position Status | Return(%)* |
|---|---|---|---|---|---|---|---|---|
| 13 May, 25 | CNI | Buy | USD 104.7 | USD 110.0 | USD 120.0 | 92 days | Closed |
10.32%
|
*Return(%) represent the percentage change between the entry price and exit price of the recommendation.
Data Powered by EOD Historical Data (“EODHD”).
Canadian National Railway Company, together with its subsidiaries, engages in rail and related transportation business. The company offers rail services, which include equipment, custom brokage services, transloading and distribution, business development and real estate, and private car storage services; and intermodal services including temperature controlled cargo, port partnership, transloading and distribution, logistic parks, customs brokerage, trucking, and moving grains in containers. It also provides trucking services, such as door-to-door services, import and export dray, interline services, and specialized services comprising flatbed trucks, on-deck mobile transport trays, expedited and temperature controlled cargo, and permit/overweight services; and supply chain services. In addition, it serves automotive, coal, fertilizers, temperature controlled cargo, forest products, dimensional, grain, metal and minerals, petroleum and chemicals, and consumer goods applications. Further, the company operates a network of 20,000 route miles of track and shipping Canada and the United States. Canadian National Railway Company was incorporated in 1919 and is headquartered in Montreal, Canada.
Coal revenues grew by 19% year-over-year, contributing positively to the freight revenue mix.
CN returned C$1.3 billion to shareholders via buybacks and dividends in Q1 2025.
Intermodal revenue dropped significantly by 13%, indicating weakness in a major freight segment
Total revenue declined by 4% to C$4.25 billion compared to Q1 2024
Canadian National Railway faces significant investment risk due to its heavy reliance on cyclical sectors such as intermodal and petroleum, which remain vulnerable to economic slowdowns and fluctuating commodity demand
| Entry Price | Support* | Target 1** | Target 2** |
|---|---|---|---|
| 104.7 | 90.0 | 110.0 | 120.0 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
**Target prices may vary by ±0.5% depending on market volatility.
Financial Overview and Revenue Trends: Canadian National Railway Company (CN) reported total revenues of C$4.25 billion in the first quarter of 2025, reflecting a 4% decline compared to the same period in 2024. This downturn was primarily attributed to softer demand in certain key markets, as well as challenging operating conditions. Revenue ton miles decreased by 2%, while freight revenue per revenue ton mile declined by 1%. The weakness in volumes and yields has adversely impacted the overall top-line performance of the company during the quarter.
Operating Performance and Efficiency: Despite the decline in revenues, CN maintained a strong operational performance. The operating ratio—a key efficiency metric—remained steady at 67.1% compared to Q1 2024. Operating income decreased by 4% to C$1.39 billion, in line with the overall revenue contraction. However, the railway demonstrated effective cost management through reductions in fuel expenses and productivity improvements across the network, offsetting some of the volume-driven revenue headwinds.
Earnings and Profitability: Net income for the quarter stood at C$1.20 billion, which represents a modest 2% year-over-year decline. Diluted earnings per share (EPS) fell by 1% to C$1.84, showcasing a relatively resilient bottom-line performance amidst softer macroeconomic conditions. This relatively minor decline in EPS signals CN’s ability to preserve shareholder value even under adverse revenue pressures.
Segmental and Commodity Performance: CN experienced notable weakness in specific commodity groups. Intermodal revenue declined by 13%, petroleum and chemicals by 6%, and automotive by 6%. These declines were attributed to softer economic activity and lower customer demand in these segments. Conversely, coal and grain & fertilizers exhibited year-over-year increases of 19% and 3%, respectively. These growth areas partially offset losses in the underperforming segments and demonstrated the diversification of CN’s commodity exposure.
Strategic Developments and Long-Term Investments: During the quarter, CN continued to invest strategically in infrastructure and technology to support long-term growth. Capital expenditures were focused on enhancing network fluidity and reliability. The company reaffirmed its full-year outlook for 2025, including assumptions of modest economic growth and improved operating conditions in the second half of the year. CN remains committed to safety, innovation, and sustainability as pillars of its future competitiveness.
Shareholder Returns and Capital Allocation: CN returned approximately C$1.3 billion to shareholders through share repurchases and dividends during the quarter. This represents a significant commitment to capital returns, despite the broader economic uncertainty. The strong free cash flow generation and disciplined financial management have enabled the company to balance investment with rewarding shareholders.
Considering recent key business, financial updates, current trading levels, and key business risks, a ‘Buy’ recommendation has been given on Canadian National Railway Company (NYSE: CNI) at the closing market price of USD 104.70, as on May 12, 2025.
Data Powered by EOD Historical Data (“EODHD”).
Sector: Industrials Industry: Railroads
| Company | Change (USD) | Price (USD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| CNI Canadian National Railway Company |
1.89 1.94% | 99.26 | 22.52 | 20.12 | 4.69 | 5.29 | 5.50 | 10.36 |
| UNP Union Pacific Corporation |
-2.54 1.07% | 234.20 | 23.36 | 20.96 | 6.01 | 10.35 | 7.40 | 15.07 |
| CP Canadian Pacific Railway Ltd |
0.47 0.64% | 73.99 | 23.65 | 23.04 | 6.42 | 2.32 | 7.95 | -95.3697 |
| CSX CSX Corporation |
0.20 0.53% | 36.70 | 18.30 | 17.04 | 4.44 | 5.16 | 5.64 | 11.43 |
| NSC Norfolk Southern Corporation |
-2.64 0.90% | 291.79 | 25.64 | 17.70 | 4.22 | 4.12 | 5.44 | 14.30 |
Data Powered by EOD Historical Data (“EODHD”).
Related Risks: This report may be looked at from high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is May 12,2025. The reference data in this report has been partly sourced from REFINITIV.
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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