As of May 31, 2025, Canadian National Railway Co has a Discounted Cash Flow (DCF) derived fair value of $182.10 per share. With the current market price at $145.01, this represents a potential upside of 25.6%.
| Key Metrics | Value |
|---|---|
| DCF Fair Value (5-year) | $169.87 |
| DCF Fair Value (10-year) | $182.10 |
| Potential Upside (5-year) | 17.1% |
| Potential Upside (10-year) | 25.6% |
| Discount Rate (WACC) | 6.4% - 8.3% |
Revenue is projected to grow from $17046 million in 12-2024 to $24743 million by 12-2034, representing a compound annual growth rate of approximately 3.8%.
| Fiscal Year | Revenue (USD millions) | Growth |
|---|---|---|
| 12-2024 | 17046 | 1% |
| 12-2025 | 17664 | 4% |
| 12-2026 | 18448 | 4% |
| 12-2027 | 18817 | 2% |
| 12-2028 | 19316 | 3% |
| 12-2029 | 20664 | 7% |
| 12-2030 | 21115 | 2% |
| 12-2031 | 22585 | 7% |
| 12-2032 | 23297 | 3% |
| 12-2033 | 24256 | 4% |
| 12-2034 | 24743 | 2% |
Net profit margin is expected to improve from 26% in 12-2024 to 28% by 12-2034, driven by operational efficiency and economies of scale.
| Fiscal Year | Net Profit (USD millions) | Profit Margin |
|---|---|---|
| 12-2024 | 4448 | 26% |
| 12-2025 | 4678 | 26% |
| 12-2026 | 4956 | 27% |
| 12-2027 | 5126 | 27% |
| 12-2028 | 5333 | 28% |
| 12-2029 | 5779 | 28% |
| 12-2030 | 5905 | 28% |
| 12-2031 | 6316 | 28% |
| 12-2032 | 6516 | 28% |
| 12-2033 | 6784 | 28% |
| 12-2034 | 6920 | 28% |
with a 5-year average of $3048 million. Projected CapEx is expected to maintain at approximately 19% of revenue.
Depreciation is based on an average useful life of 5 years for capital assets.
| Fiscal Year | D&A (USD millions) |
|---|---|
| 12-2025 | 3157 |
| 12-2026 | 3291 |
| 12-2027 | 3468 |
| 12-2028 | 3576 |
| 12-2029 | 3664 |
| 12-2030 | 3798 |
Net working capital is expected to increase gradually, with projected changes affecting free cash flow.
| Components | Average Days |
|---|---|
| Days Receivables | 27 |
| Days Inventory | 57 |
| Days Payables | 80 |
| Fiscal Year | EBITDA | Tax | CapEx | Change in NWC | FCF |
|---|---|---|---|---|---|
| 9M/2025 | 7667 | 1107 | 2557 | 147 | 3855 |
| 2026 | 10764 | 1564 | 3561 | 11 | 5627 |
| 2027 | 11182 | 1618 | 3633 | (1) | 5933 |
| 2028 | 11588 | 1683 | 3729 | 68 | 6109 |
| 2029 | 12334 | 1824 | 3989 | 72 | 6449 |
| Valuation Method | Fair Price (USD) | Potential Upside |
|---|---|---|
| 5-Year DCF (Growth) | 169.87 | 17.1% |
| 10-Year DCF (Growth) | 182.10 | 25.6% |
| 5-Year DCF (EBITDA) | 170.24 | 17.4% |
| 10-Year DCF (EBITDA) | 182.34 | 25.7% |
Is Canadian National Railway Co (CNR.TO) a buy or a sell? Canadian National Railway Co is definitely a buy. Based on our DCF analysis, Canadian National Railway Co (CNR.TO) appears to be significantly undervalued with upside potential of 25.6%. The company's strong projected growth in revenue and profitability, coupled with consistent capital expenditure, supports our positive outlook on its intrinsic value.
Key investment drivers include:
Investors should consider a strong buy at the current market price of $145.01.