Canadian National Railway

As I said yesterday, I was looking to buy some more Canadian National Railway (TSX-CNR) today. Although the proxy and 2008 Annual Statements have not been distributed, the unaudited 4th quarterly report is available online. So I have updated my spreadsheet for the year ending December 2008

All my following figures are for the year ending at the last annual statement of December 2008. First, what I find good about this stock. The Earnings per Share (EPS) growth for the last 5 and 10 years was 18% and 23%. The 5 and 10 years growth for Dividends was 22% and 18%. The 5 and 10 year figures for Closing Price is 12% and 15%. The 5 and 10 year figures for Book Value is 8% and 10%.

What I do not like is that the Liquidity (Current Asset/Current Liability Ratio) is only .93. This is better than the 5 and 10 year averages of .71 and .68 but I would like it to be higher. The Asset/Liability is much better at 1.66. This is a little lower than the 5 and 10 year averages, but still good. The 5 and 10 growth figures for revenues at 8% and 7% are not bad, but not great either.

I bought this stock in 2005 and during this time, my dividends have increase by just over 100%. I have also made an average annual return of 8.2%. This is not bad considering the fact that we are in a bear market. The dividends have not added a great deal to this stock, as the yield is low at an average of 1.5%. So, it has added to the return by only 1.5% per year. However, CNR has raised their dividend every year, and they have again announced that the dividends will increase for the dividend due at the end of March 2009.

So, in review, most of the indicators I follow are favorable on this stock. The main one I do not like is the liquidity ratio and this is not a great time to have a low liquidity ratio. However, no stock is going to be perfect. Tomorrow, I will review what the analysts are saying about this stock.

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 www.cn.ca. See my spreadsheet at www.spbrunner.com/stocks/cnr.htm.

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 www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets on my web site.