Thursday, January 29, 2009

Canadian National Railway 2

As I said yesterday, I will look to see what the analysts are saying about this stock (TSX-CNR) today. I will update my spreadsheet with the figures from analyst’s reports and current stock prices. I have included estimates for 2009 and 2010. However, do not forget that these are just estimates, and can therefore be very wrong.

The first thing I want to note is that the Globe Investor site gives this stock a 5 star rating. In looking at the ratings for this stock, they range from Strong Buy to Hold, with lots of Hold ratings. However, the mean rating is a Buy. (See my site for information on analyst ratings.) When looking at insider buying and selling there is a lot of selling. However, the selling seems to be all options. This, of course, tells you nothing.

If you look at the charts, this stock has outperformed the TSX and the TSX Industrial Index (of which it is a part) over 1, 3, 5 and 10 year periods. However, it does seem to be trading in a band for the last 3 years. Note that a lot of people feel that the TSX has been trading in a Band for quite some time. By trading in a Band, I mean that this stock has stayed within a price range of $40 to $60. It has not been lower than $40 and it has not been higher than $60 within the last 3 years.

Now I shall look at the spreadsheet to see if this stock is at a good price. This first thing to note that the price is below the last Graham price I had calculated. The last Graham Price was $44.46 and it is trading currently at $43.55. The yield at 2.3% is higher than the 5 year average of 1.6%. The P/E is 11 and this is lower than the 5 year average of 13.8. It is also slightly below the 5 year average low of 11.3. The Price to Book Value (P/BV) is at 2.0 and this is lower than the 5 year average of 2.29.

What is negative about this stock is that the Price/Cash Flow Ratio is 10.5 and this is slightly above the 5 year average of 9.2. The other negative, which I pointed out yesterday, is the Liquidity Ratio is just .93. This means that the company does not have current assets to cover current liabilities. However, any stock you look at will have at least some negative quality. Also, this company is on everybody’s list, including the usual ones of Dividend Achievers, Dividend Aristocrats and Mike’s.

CNR have railways lines that cross the North American continent and serve ports on the Atlantic, Pacific and Gulf coasts. They link customers to all three NAFTA nations. Its web site is See my spreadsheet at

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at for a list of the stocks for which I have put up spreadsheets on my web site.

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