Canadian National Railway shares fell by -2.1% during the day's afternoon session, and are now trading at a price of $106.96. Is it time to buy the dip? To better answer that question, it's essential to check if the market is valuing the company's shares fairly in terms of its earnings and equity levels.
a Very Low P/E Ratio but Trades Above Its Graham Number:
Canadian National Railway Company, together with its subsidiaries, engages in the rail, intermodal, trucking, and marine transportation and logistics business in Canada and the United States. The company belongs to the Industrials sector, which has an average price to earnings (P/E) ratio of 25.42 and an average price to book (P/B) ratio of 3.2. In contrast, Canadian National Railway has a trailing 12 month P/E ratio of 17.8 and a P/B ratio of 3.46.
Canadian National Railway has moved -10.1% over the last year compared to 31.8% for the S&P 500 — a difference of -41.9%. Canadian National Railway has a 52 week high of $134.02 and a 52 week low of $105.28.
EPS Trend Sustained Primarily by Reducing the Number of Shares Outstanding:
| 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $12,611 | $12,037 | $13,041 | $14,321 | $14,917 | $13,819 |
| Operating Margins | 42% | 44% | 43% | 38% | 37% | 35% |
| Net Margins | 28% | 30% | 42% | 30% | 28% | 26% |
| Net Income (M) | $3,538 | $3,640 | $5,484 | $4,328 | $4,216 | $3,562 |
| Net Interest Expense (M) | $439 | $480 | $481 | $489 | $538 | $554 |
| Depreciation & Amort. (M) | $1,158 | $1,225 | $1,281 | $1,327 | $1,559 | $1,583 |
| Diluted Shares (M) | 805 | 779 | 757 | 738 | 723 | 713 |
| Earnings Per Share | $4.39 | $4.67 | $7.24 | $5.87 | $5.83 | $5.0 |
| EPS Growth | n/a | 6.38% | 55.03% | -18.92% | -0.68% | -14.24% |
| Free Cash Flow (M) | $2,434 | $2,507 | $2,843 | $2,387 | $2,058 | $3,302 |
| CAPEX (M) | $2,706 | $2,695 | $2,673 | $3,531 | $3,865 | $2,863 |
| Total Debt (M) | $8,985 | $9,448 | $10,670 | $12,540 | $13,662 | $12,832 |
| Net Debt / EBITDA | 1.37 | 1.42 | 1.55 | 1.8 | 1.9 | 1.93 |
| Current Ratio | 0.72 | 0.7 | 0.55 | 0.78 | 0.66 | 0.95 |
