Ever wondered if Canadian National Railway stock is a bargain, or if recent headlines and market noise are hiding its real value?
Despite a long-term track record, the stock is down 2.3% over the last week and 10.5% year-to-date, suggesting shifting investor sentiment and a potentially intriguing opportunity.
Industry news has highlighted ongoing supply chain adjustments and increased competition across North America, which have fed into recent price volatility. Regulatory developments and infrastructure investments are also making headlines, shaping expectations for the railway sector as a whole.
When it comes to the numbers, Canadian National Railway currently scores 4 out of 6 on our valuation checks. This means it appears undervalued in several key areas. We will break down these valuation approaches next, but stick with us to explore a method that could offer you an even clearer perspective by the end of this article.
The Discounted Cash Flow (DCF) model estimates a company’s intrinsic value by projecting its future cash flows and discounting them back to their present value. This approach is widely used to assess whether a stock is worth more or less than its current trading price, based on its long-term ability to generate cash.
For Canadian National Railway, the latest Free Cash Flow (FCF) stands at CA$3.43 billion. Over the next decade, analysts expect this to steadily grow, with projections indicating FCF could reach approximately CA$5.0 billion by 2035. The first five years of these projections are based on analyst estimates; further-out numbers come from Simply Wall St’s extrapolations. This sustained growth in FCF highlights the company’s solid financial fundamentals and continued operational strength.
Based on the 2 Stage Free Cash Flow to Equity model, the resulting intrinsic value per share is estimated at CA$138.11. With the DCF analysis suggesting the stock is trading at a 4.9% discount to this intrinsic value, Canadian National Railway currently appears to be fairly valued relative to its estimated worth.
Result: ABOUT RIGHT
Canadian National Railway is fairly valued according to our Discounted Cash Flow (DCF), but this can change at a moment’s notice. Track the value in your watchlist or portfolio and be alerted on when to act.
CNR Discounted Cash Flow as at Nov 2025
The price-to-earnings (PE) ratio is one of the most widely used multiples for valuing profitable companies like Canadian National Railway. Because it directly compares a company’s share price to its earnings, the PE ratio provides a snapshot of how much investors are willing to pay today for a dollar of the company’s earnings. For well-established, steadily profitable businesses, the PE ratio is particularly insightful as it reflects both growth expectations and perceived risk. Higher growth and lower risk justify a higher “normal” PE, while slower or uncertain prospects warrant a lower one.
Canadian National Railway currently trades at a PE ratio of 17.5x. This sits above the average for the Canadian transportation industry (14.8x), but below the average of its major North American peers (21.2x). On face value, this suggests investors are willing to pay a modest premium compared to the sector, but at a discount relative to leading peers.
To refine the comparison, Simply Wall St calculates a proprietary “Fair Ratio.” In this case, the Fair Ratio is 18.1x and estimates what a reasonable PE should be, taking into account factors such as the company’s earnings stability, future growth, profit margins, market cap, and unique risks. This Fair Ratio gives a more customized benchmark than blunt industry or peer averages because it reflects Canadian National Railway’s specific context, not just broad sector trends or competitor valuations.
With a current PE of 17.5x and a Fair Ratio of 18.1x, Canadian National Railway is trading very close to its fair value on an earnings basis.
Result: ABOUT RIGHT
TSX:CNR PE Ratio as at Nov 2025
PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1421 companies where insiders are betting big on explosive growth.
Earlier we mentioned there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is your story, a perspective on a company that sits behind the numbers, incorporating your views on fair value, future growth, and profitability into a financial forecast. Narratives connect a company’s story and data to its financial outlook, helping you define exactly what you believe and why it matters for a stock’s value.
Simply Wall St makes creating and exploring Narratives easy, accessible, and interactive within the Community page used by millions of investors. With Narratives, you can stress-test your own assumptions about Canadian National Railway, or see how others are viewing the same data in real time. They let you compare Fair Value with the latest market Price, so you can decide whether you’d buy, hold, or sell. Because Narratives update dynamically as news and company results come in, your insights are always current.
For example, some investors see CN’s network as a rare, “forever asset” and forecast double-digit returns if North American manufacturing rebounds, setting a bull-case target as high as CA$284.80. Others remain more cautious, with bear-case forecasts closer to CA$133.00 if key risks materialize. Narratives put these perspectives side by side, helping you invest with clarity and conviction.
Do you think there’s more to the story for Canadian National Railway? Head over to our Community to see what others are saying!
TSX:CNR Earnings & Revenue History as at Nov 2025
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include CNR.TO.
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