Intrinsic value of Canadian National Railway Company - CNR

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$99.15

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$99.15

 
Intrinsic value

$39.25

 
Up/down potential

-60%

 
Rating

str. sell

 
Value-price divergence* premium content

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*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of CNR stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 75.2

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -4.55
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  12,037
  12,278
  12,560
  12,883
  13,245
  13,647
  14,087
  14,567
  15,087
  15,646
  16,247
  16,889
  17,574
  18,304
  19,080
  19,903
  20,775
  21,698
  22,675
  23,706
  24,796
  25,945
  27,157
  28,435
  29,781
  31,199
  32,691
  34,262
  35,916
  37,655
  39,485
Variable operating expenses, $m
 
  7,146
  7,310
  7,498
  7,709
  7,942
  8,199
  8,478
  8,780
  9,106
  9,455
  9,829
  10,228
  10,653
  11,104
  11,583
  12,091
  12,628
  13,197
  13,797
  14,431
  15,100
  15,805
  16,549
  17,332
  18,158
  19,026
  19,941
  20,903
  21,915
  22,980
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  6,725
  7,146
  7,310
  7,498
  7,709
  7,942
  8,199
  8,478
  8,780
  9,106
  9,455
  9,829
  10,228
  10,653
  11,104
  11,583
  12,091
  12,628
  13,197
  13,797
  14,431
  15,100
  15,805
  16,549
  17,332
  18,158
  19,026
  19,941
  20,903
  21,915
  22,980
Operating income, $m
  5,312
  5,132
  5,250
  5,385
  5,537
  5,704
  5,889
  6,089
  6,306
  6,540
  6,791
  7,060
  7,346
  7,651
  7,975
  8,319
  8,684
  9,070
  9,478
  9,909
  10,365
  10,845
  11,352
  11,886
  12,448
  13,041
  13,665
  14,322
  15,013
  15,740
  16,505
EBITDA, $m
  6,537
  6,384
  6,531
  6,699
  6,887
  7,096
  7,325
  7,574
  7,844
  8,135
  8,447
  8,781
  9,138
  9,517
  9,921
  10,349
  10,802
  11,282
  11,790
  12,326
  12,893
  13,490
  14,120
  14,785
  15,485
  16,222
  16,998
  17,815
  18,675
  19,579
  20,530
Interest expense (income), $m
  470
  473
  495
  517
  544
  573
  605
  641
  679
  721
  767
  815
  867
  922
  981
  1,044
  1,110
  1,181
  1,255
  1,334
  1,417
  1,505
  1,598
  1,696
  1,799
  1,907
  2,022
  2,142
  2,269
  2,403
  2,543
Earnings before tax, $m
  4,927
  4,659
  4,755
  4,868
  4,993
  5,132
  5,283
  5,448
  5,627
  5,819
  6,025
  6,245
  6,479
  6,729
  6,994
  7,276
  7,574
  7,889
  8,223
  8,575
  8,947
  9,340
  9,754
  10,190
  10,650
  11,134
  11,643
  12,179
  12,744
  13,337
  13,962
Tax expense, $m
  1,287
  1,258
  1,284
  1,314
  1,348
  1,386
  1,427
  1,471
  1,519
  1,571
  1,627
  1,686
  1,749
  1,817
  1,888
  1,964
  2,045
  2,130
  2,220
  2,315
  2,416
  2,522
  2,634
  2,751
  2,875
  3,006
  3,144
  3,288
  3,441
  3,601
  3,770
Net income, $m
  3,640
  3,401
  3,471
  3,553
  3,645
  3,746
  3,857
  3,977
  4,108
  4,248
  4,398
  4,559
  4,730
  4,912
  5,106
  5,311
  5,529
  5,759
  6,003
  6,260
  6,532
  6,818
  7,120
  7,439
  7,774
  8,128
  8,499
  8,891
  9,303
  9,736
  10,192

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  176
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  37,057
  37,662
  38,528
  39,518
  40,630
  41,862
  43,213
  44,685
  46,278
  47,994
  49,836
  51,807
  53,909
  56,148
  58,527
  61,052
  63,727
  66,559
  69,554
  72,719
  76,060
  79,586
  83,304
  87,223
  91,352
  95,701
  100,280
  105,099
  110,171
  115,507
  121,119
Adjusted assets (=assets-cash), $m
  36,881
  37,662
  38,528
  39,518
  40,630
  41,862
  43,213
  44,685
  46,278
  47,994
  49,836
  51,807
  53,909
  56,148
  58,527
  61,052
  63,727
  66,559
  69,554
  72,719
  76,060
  79,586
  83,304
  87,223
  91,352
  95,701
  100,280
  105,099
  110,171
  115,507
  121,119
Revenue / Adjusted assets
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
Average production assets, $m
  33,259
  33,923
  34,704
  35,596
  36,597
  37,706
  38,924
  40,249
  41,684
  43,230
  44,889
  46,664
  48,558
  50,574
  52,718
  54,992
  57,402
  59,952
  62,650
  65,501
  68,510
  71,686
  75,035
  78,565
  82,284
  86,201
  90,326
  94,667
  99,235
  104,041
  109,096
Working capital, $m
  -901
  417
  427
  438
  450
  464
  479
  495
  513
  532
  552
  574
  598
  622
  649
  677
  706
  738
  771
  806
  843
  882
  923
  967
  1,013
  1,061
  1,112
  1,165
  1,221
  1,280
  1,342
Total debt, $m
  10,937
  11,243
  11,761
  12,353
  13,018
  13,754
  14,562
  15,443
  16,395
  17,421
  18,523
  19,701
  20,959
  22,297
  23,720
  25,230
  26,830
  28,523
  30,314
  32,207
  34,205
  36,313
  38,537
  40,880
  43,349
  45,950
  48,688
  51,570
  54,603
  57,794
  61,150
Total liabilities, $m
  22,216
  22,522
  23,040
  23,632
  24,297
  25,033
  25,841
  26,722
  27,674
  28,700
  29,802
  30,980
  32,238
  33,576
  34,999
  36,509
  38,109
  39,802
  41,593
  43,486
  45,484
  47,592
  49,816
  52,159
  54,628
  57,229
  59,967
  62,849
  65,882
  69,073
  72,429
Total equity, $m
  14,841
  15,140
  15,488
  15,886
  16,333
  16,828
  17,372
  17,963
  18,604
  19,294
  20,034
  20,826
  21,671
  22,571
  23,528
  24,543
  25,618
  26,757
  27,961
  29,233
  30,576
  31,993
  33,488
  35,064
  36,723
  38,472
  40,313
  42,250
  44,289
  46,434
  48,690
Total liabilities and equity, $m
  37,057
  37,662
  38,528
  39,518
  40,630
  41,861
  43,213
  44,685
  46,278
  47,994
  49,836
  51,806
  53,909
  56,147
  58,527
  61,052
  63,727
  66,559
  69,554
  72,719
  76,060
  79,585
  83,304
  87,223
  91,351
  95,701
  100,280
  105,099
  110,171
  115,507
  121,119
Debt-to-equity ratio
  0.737
  0.740
  0.760
  0.780
  0.800
  0.820
  0.840
  0.860
  0.880
  0.900
  0.920
  0.950
  0.970
  0.990
  1.010
  1.030
  1.050
  1.070
  1.080
  1.100
  1.120
  1.140
  1.150
  1.170
  1.180
  1.190
  1.210
  1.220
  1.230
  1.240
  1.260
Adjusted equity ratio
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  3,640
  3,401
  3,471
  3,553
  3,645
  3,746
  3,857
  3,977
  4,108
  4,248
  4,398
  4,559
  4,730
  4,912
  5,106
  5,311
  5,529
  5,759
  6,003
  6,260
  6,532
  6,818
  7,120
  7,439
  7,774
  8,128
  8,499
  8,891
  9,303
  9,736
  10,192
Depreciation, amort., depletion, $m
  1,225
  1,252
  1,281
  1,313
  1,350
  1,391
  1,436
  1,485
  1,538
  1,595
  1,656
  1,722
  1,792
  1,866
  1,945
  2,029
  2,118
  2,212
  2,312
  2,417
  2,528
  2,645
  2,769
  2,899
  3,036
  3,181
  3,333
  3,493
  3,662
  3,839
  4,026
Funds from operations, $m
  4,911
  4,653
  4,752
  4,867
  4,995
  5,137
  5,293
  5,463
  5,646
  5,843
  6,054
  6,280
  6,522
  6,778
  7,051
  7,340
  7,647
  7,972
  8,315
  8,677
  9,060
  9,463
  9,889
  10,338
  10,811
  11,308
  11,833
  12,384
  12,965
  13,575
  14,218
Change in working capital, $m
  -291
  8
  10
  11
  12
  14
  15
  16
  18
  19
  20
  22
  23
  25
  26
  28
  30
  31
  33
  35
  37
  39
  41
  43
  46
  48
  51
  53
  56
  59
  62
Cash from operations, $m
  5,202
  5,208
  4,742
  4,856
  4,983
  5,124
  5,278
  5,446
  5,628
  5,824
  6,034
  6,259
  6,498
  6,754
  7,025
  7,312
  7,617
  7,940
  8,281
  8,642
  9,023
  9,424
  9,848
  10,294
  10,765
  11,260
  11,782
  12,331
  12,909
  13,516
  14,156
Maintenance CAPEX, $m
  0
  -1,227
  -1,252
  -1,281
  -1,313
  -1,350
  -1,391
  -1,436
  -1,485
  -1,538
  -1,595
  -1,656
  -1,722
  -1,792
  -1,866
  -1,945
  -2,029
  -2,118
  -2,212
  -2,312
  -2,417
  -2,528
  -2,645
  -2,769
  -2,899
  -3,036
  -3,181
  -3,333
  -3,493
  -3,662
  -3,839
New CAPEX, $m
  -2,695
  -665
  -780
  -892
  -1,001
  -1,110
  -1,217
  -1,326
  -1,435
  -1,546
  -1,659
  -1,775
  -1,894
  -2,016
  -2,143
  -2,274
  -2,410
  -2,551
  -2,698
  -2,850
  -3,010
  -3,176
  -3,349
  -3,530
  -3,719
  -3,917
  -4,124
  -4,341
  -4,568
  -4,806
  -5,055
Cash from investing activities, $m
  -2,655
  -1,892
  -2,032
  -2,173
  -2,314
  -2,460
  -2,608
  -2,762
  -2,920
  -3,084
  -3,254
  -3,431
  -3,616
  -3,808
  -4,009
  -4,219
  -4,439
  -4,669
  -4,910
  -5,162
  -5,427
  -5,704
  -5,994
  -6,299
  -6,618
  -6,953
  -7,305
  -7,674
  -8,061
  -8,468
  -8,894
Free cash flow, $m
  2,547
  3,316
  2,710
  2,683
  2,668
  2,664
  2,669
  2,684
  2,708
  2,740
  2,780
  2,827
  2,883
  2,945
  3,015
  3,093
  3,178
  3,271
  3,371
  3,480
  3,596
  3,721
  3,854
  3,996
  4,146
  4,307
  4,477
  4,657
  4,847
  5,048
  5,261
Issuance/(repayment) of debt, $m
  691
  482
  518
  592
  665
  737
  808
  880
  953
  1,026
  1,101
  1,178
  1,257
  1,339
  1,423
  1,510
  1,600
  1,694
  1,791
  1,892
  1,998
  2,108
  2,223
  2,344
  2,469
  2,601
  2,738
  2,882
  3,033
  3,191
  3,356
Issuance/(repurchase) of shares, $m
  -2,006
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -1,380
  482
  518
  592
  665
  737
  808
  880
  953
  1,026
  1,101
  1,178
  1,257
  1,339
  1,423
  1,510
  1,600
  1,694
  1,791
  1,892
  1,998
  2,108
  2,223
  2,344
  2,469
  2,601
  2,738
  2,882
  3,033
  3,191
  3,356
Total cash flow (excl. dividends), $m
  1,182
  3,797
  3,228
  3,276
  3,333
  3,400
  3,478
  3,564
  3,661
  3,766
  3,881
  4,006
  4,140
  4,284
  4,438
  4,603
  4,778
  4,965
  5,162
  5,372
  5,594
  5,829
  6,077
  6,339
  6,616
  6,907
  7,215
  7,539
  7,880
  8,239
  8,617
Retained Cash Flow (-), $m
  109
  -299
  -348
  -398
  -447
  -495
  -543
  -592
  -640
  -690
  -740
  -792
  -845
  -900
  -956
  -1,015
  -1,076
  -1,139
  -1,204
  -1,272
  -1,343
  -1,417
  -1,495
  -1,575
  -1,660
  -1,748
  -1,841
  -1,937
  -2,039
  -2,145
  -2,256
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  3,498
  2,880
  2,877
  2,886
  2,905
  2,934
  2,973
  3,020
  3,076
  3,141
  3,213
  3,295
  3,384
  3,482
  3,588
  3,703
  3,826
  3,958
  4,100
  4,251
  4,412
  4,582
  4,764
  4,956
  5,159
  5,374
  5,601
  5,841
  6,094
  6,361
Discount rate, %
 
  5.40
  5.67
  5.95
  6.25
  6.56
  6.89
  7.24
  7.60
  7.98
  8.38
  8.80
  9.24
  9.70
  10.18
  10.69
  11.23
  11.79
  12.38
  13.00
  13.65
  14.33
  15.04
  15.80
  16.59
  17.42
  18.29
  19.20
  20.16
  21.17
  22.23
PV of cash for distribution, $m
 
  3,319
  2,579
  2,419
  2,265
  2,114
  1,967
  1,823
  1,681
  1,542
  1,405
  1,271
  1,141
  1,016
  896
  782
  675
  576
  485
  402
  329
  265
  210
  163
  125
  93
  68
  49
  34
  23
  15
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Canadian National Railway Company engages in rail and related transportation business. The company transports cargo serving exporters, importers, retailers, farmers, and manufacturers. It operates a network of approximately 20,000 route miles of track spans Canada and mid-America connecting the Atlantic, the Pacific, and the Gulf of Mexico. The company serves the cities and ports of Vancouver, Prince Rupert (British Columbia), Montreal, Halifax, New Orleans, and Mobile (Alabama), as well as the metropolitan areas of Toronto, Edmonton, Winnipeg, Calgary, Chicago, Memphis, Detroit, Duluth (Minnesota)/Superior (Wisconsin), and Jackson (Mississippi) with connections to various points in North America. Canadian National Railway Company was founded in 1919 and is headquartered in Montreal, Canada.

FINANCIAL RATIOS  of  Canadian National Railway Company (CNR)

Valuation Ratios
P/E Ratio 20.8
Price to Sales 6.3
Price to Book 5.1
Price to Tangible Book
Price to Cash Flow 14.5
Price to Free Cash Flow 30.1
Growth Rates
Sales Growth Rate -4.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -0.4%
Cap. Spend. - 3 Yr. Gr. Rate 6.4%
Financial Strength
Quick Ratio 0
Current Ratio 0.2
LT Debt to Equity 63.7%
Total Debt to Equity 73.7%
Interest Coverage 11
Management Effectiveness
Return On Assets 10.9%
Ret/ On Assets - 3 Yr. Avg. 11.1%
Return On Total Capital 14.2%
Ret/ On T. Cap. - 3 Yr. Avg. 14.7%
Return On Equity 24.4%
Return On Equity - 3 Yr. Avg. 24.4%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 78%
Gross Margin - 3 Yr. Avg. 75.3%
EBITDA Margin 55%
EBITDA Margin - 3 Yr. Avg. 51.4%
Operating Margin 44.1%
Oper. Margin - 3 Yr. Avg. 41.3%
Pre-Tax Margin 40.9%
Pre-Tax Margin - 3 Yr. Avg. 38.5%
Net Profit Margin 30.2%
Net Profit Margin - 3 Yr. Avg. 28.1%
Effective Tax Rate 26.1%
Eff/ Tax Rate - 3 Yr. Avg. 27%
Payout Ratio 31.8%

CNR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CNR stock intrinsic value calculation we used $12037 million for the last fiscal year's total revenue generated by Canadian National Railway Company. The default revenue input number comes from 2016 income statement of Canadian National Railway Company. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our CNR stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 5.4%, whose default value for CNR is calculated based on our internal credit rating of Canadian National Railway Company, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Canadian National Railway Company.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of CNR stock the variable cost ratio is equal to 58.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for CNR stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 4.4% for Canadian National Railway Company.

Corporate tax rate of 27% is the nominal tax rate for Canadian National Railway Company. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the CNR stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for CNR are equal to 276.3%.

Life of production assets of 27.1 years is the average useful life of capital assets used in Canadian National Railway Company operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for CNR is equal to 3.4%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $14841 million for Canadian National Railway Company - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 758.201 million for Canadian National Railway Company is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Canadian National Railway Company at the current share price and the inputted number of shares is $75.2 billion.


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Stock chart of CNR Financial statements of CNR
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