Trying to decide what to do with Canadian National Railway stock right now? You are not alone. Whether you already own CNR or are considering buying the dip, it is natural to be curious when a reliable blue-chip makes headlines for shifting price trends. Over the past month, the stock has slipped by about 4.5%, and in the past year, it is down nearly 14%, much softer than the steady returns investors have grown used to. Add in a year-to-date slide of 11.3% and you might sense a change in how the market sees CNR’s risks versus its growth potential.
Yet, it is not all gloom. Analyst price targets still point more than 17% above the current share price, suggesting there might be upside if Canadian National delivers. Meanwhile, revenue and net income have both kept growing at a steady clip, which is hardly a red flag for the long term. For investors weighing value, our scorecard gives the company a valuation score of 3 out of 6. This means CNR screens as undervalued by half of the checks that matter most.
But how do these valuation checks work, and which are most relevant for Canadian National Railway? Let’s break down the numbers, piece by piece. Then, I will share a smarter way to get the full picture of what CNR might really be worth today.
The Discounted Cash Flow (DCF) method estimates a stock’s value by projecting its future free cash flows and discounting them back to today’s terms. This approach captures what the business would be worth if you owned it entirely.
For Canadian National Railway, the latest twelve months have seen free cash flow reach CA$3.45 billion. Analysts expect these cash flows to grow steadily, with projections reaching about CA$4.74 billion by 2035. By discounting each year’s expected cash flow, the DCF model calculates an intrinsic value for CNR of CA$123.33 per share.
When compared to the current market price, this valuation suggests Canadian National Railway stock is 5.5% overvalued based on its discounted future cash flows. This gap is modest and not enough to raise concern for long-term investors.
Result: ABOUT RIGHT
Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Canadian National Railway’s DCF analysis). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes.
The price-to-earnings (PE) ratio is a widely used metric for valuing profitable companies like Canadian National Railway because it measures how much investors are willing to pay for each dollar of earnings. A company with consistent profits provides a reliable foundation for this approach, making the PE ratio especially relevant here.
