Intrinsic value of Canadian National Railway - CNI

Previous Close

$75.55

  Intrinsic Value

premium content

  Rating & Target

premium content

  Value-price divergence*

premium content

Previous close

$75.55

 
Intrinsic value

$29.04

 
Up/down potential

-62%

 
Rating

str. sell

 
Value-price divergence* premium content

Premium access subscription - $499/yr

please register and log in before paying

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

We calculate the intrinsic value of CNI 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 57.3

 

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
  8,909
  9,087
  9,296
  9,535
  9,803
  10,101
  10,427
  10,782
  11,166
  11,580
  12,025
  12,500
  13,007
  13,548
  14,122
  14,731
  15,376
  16,060
  16,782
  17,546
  18,352
  19,203
  20,100
  21,045
  22,042
  23,091
  24,196
  25,359
  26,583
  27,870
  29,224
Variable operating expenses, $m
 
  5,289
  5,410
  5,549
  5,706
  5,879
  6,068
  6,275
  6,499
  6,740
  6,998
  7,275
  7,570
  7,885
  8,219
  8,573
  8,949
  9,347
  9,767
  10,212
  10,681
  11,176
  11,698
  12,248
  12,828
  13,439
  14,082
  14,759
  15,471
  16,220
  17,008
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
  4,977
  5,289
  5,410
  5,549
  5,706
  5,879
  6,068
  6,275
  6,499
  6,740
  6,998
  7,275
  7,570
  7,885
  8,219
  8,573
  8,949
  9,347
  9,767
  10,212
  10,681
  11,176
  11,698
  12,248
  12,828
  13,439
  14,082
  14,759
  15,471
  16,220
  17,008
Operating income, $m
  3,932
  3,798
  3,886
  3,986
  4,098
  4,222
  4,358
  4,507
  4,667
  4,841
  5,026
  5,225
  5,437
  5,663
  5,903
  6,157
  6,427
  6,713
  7,015
  7,334
  7,671
  8,027
  8,402
  8,797
  9,213
  9,652
  10,114
  10,600
  11,111
  11,650
  12,216
EBITDA, $m
  4,839
  4,725
  4,834
  4,958
  5,097
  5,252
  5,421
  5,606
  5,806
  6,021
  6,252
  6,499
  6,763
  7,044
  7,343
  7,659
  7,995
  8,350
  8,726
  9,123
  9,542
  9,985
  10,451
  10,943
  11,461
  12,006
  12,581
  13,185
  13,822
  14,491
  15,195
Interest expense (income), $m
  348
  350
  366
  383
  402
  424
  448
  474
  503
  534
  567
  603
  642
  683
  726
  772
  822
  874
  929
  987
  1,049
  1,114
  1,183
  1,255
  1,331
  1,412
  1,496
  1,586
  1,679
  1,778
  1,882
Earnings before tax, $m
  3,647
  3,448
  3,520
  3,603
  3,696
  3,798
  3,910
  4,033
  4,165
  4,307
  4,459
  4,622
  4,796
  4,980
  5,177
  5,385
  5,606
  5,839
  6,086
  6,347
  6,622
  6,913
  7,219
  7,542
  7,882
  8,240
  8,617
  9,014
  9,432
  9,871
  10,334
Tax expense, $m
  953
  931
  950
  973
  998
  1,025
  1,056
  1,089
  1,124
  1,163
  1,204
  1,248
  1,295
  1,345
  1,398
  1,454
  1,514
  1,577
  1,643
  1,714
  1,788
  1,866
  1,949
  2,036
  2,128
  2,225
  2,327
  2,434
  2,547
  2,665
  2,790
Net income, $m
  2,694
  2,517
  2,569
  2,630
  2,698
  2,773
  2,855
  2,944
  3,040
  3,144
  3,255
  3,374
  3,501
  3,636
  3,779
  3,931
  4,092
  4,263
  4,443
  4,633
  4,834
  5,046
  5,270
  5,506
  5,754
  6,015
  6,291
  6,581
  6,885
  7,206
  7,543

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  130
  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
  27,428
  27,875
  28,516
  29,249
  30,072
  30,983
  31,984
  33,073
  34,252
  35,522
  36,885
  38,344
  39,900
  41,557
  43,318
  45,186
  47,167
  49,263
  51,480
  53,822
  56,295
  58,904
  61,656
  64,557
  67,613
  70,832
  74,221
  77,788
  81,541
  85,490
  89,644
Adjusted assets (=assets-cash), $m
  27,298
  27,875
  28,516
  29,249
  30,072
  30,983
  31,984
  33,073
  34,252
  35,522
  36,885
  38,344
  39,900
  41,557
  43,318
  45,186
  47,167
  49,263
  51,480
  53,822
  56,295
  58,904
  61,656
  64,557
  67,613
  70,832
  74,221
  77,788
  81,541
  85,490
  89,644
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
  24,617
  25,108
  25,685
  26,345
  27,087
  27,908
  28,809
  29,790
  30,852
  31,996
  33,224
  34,538
  35,939
  37,432
  39,018
  40,701
  42,485
  44,373
  46,370
  48,479
  50,707
  53,057
  55,536
  58,149
  60,901
  63,801
  66,853
  70,066
  73,447
  77,005
  80,746
Working capital, $m
  -667
  309
  316
  324
  333
  343
  355
  367
  380
  394
  409
  425
  442
  461
  480
  501
  523
  546
  571
  597
  624
  653
  683
  716
  749
  785
  823
  862
  904
  948
  994
Total debt, $m
  8,095
  8,321
  8,705
  9,143
  9,635
  10,180
  10,778
  11,430
  12,135
  12,894
  13,709
  14,582
  15,512
  16,503
  17,556
  18,674
  19,858
  21,111
  22,437
  23,837
  25,316
  26,877
  28,522
  30,257
  32,084
  34,009
  36,036
  38,169
  40,414
  42,775
  45,259
Total liabilities, $m
  16,443
  16,669
  17,053
  17,491
  17,983
  18,528
  19,126
  19,778
  20,483
  21,242
  22,057
  22,930
  23,860
  24,851
  25,904
  27,022
  28,206
  29,459
  30,785
  32,185
  33,664
  35,225
  36,870
  38,605
  40,432
  42,357
  44,384
  46,517
  48,762
  51,123
  53,607
Total equity, $m
  10,985
  11,206
  11,463
  11,758
  12,089
  12,455
  12,857
  13,295
  13,769
  14,280
  14,828
  15,414
  16,040
  16,706
  17,414
  18,165
  18,961
  19,804
  20,695
  21,636
  22,630
  23,679
  24,786
  25,952
  27,180
  28,474
  29,837
  31,271
  32,780
  34,367
  36,037
Total liabilities and equity, $m
  27,428
  27,875
  28,516
  29,249
  30,072
  30,983
  31,983
  33,073
  34,252
  35,522
  36,885
  38,344
  39,900
  41,557
  43,318
  45,187
  47,167
  49,263
  51,480
  53,821
  56,294
  58,904
  61,656
  64,557
  67,612
  70,831
  74,221
  77,788
  81,542
  85,490
  89,644
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
  2,694
  2,517
  2,569
  2,630
  2,698
  2,773
  2,855
  2,944
  3,040
  3,144
  3,255
  3,374
  3,501
  3,636
  3,779
  3,931
  4,092
  4,263
  4,443
  4,633
  4,834
  5,046
  5,270
  5,506
  5,754
  6,015
  6,291
  6,581
  6,885
  7,206
  7,543
Depreciation, amort., depletion, $m
  907
  926
  948
  972
  1,000
  1,030
  1,063
  1,099
  1,138
  1,181
  1,226
  1,274
  1,326
  1,381
  1,440
  1,502
  1,568
  1,637
  1,711
  1,789
  1,871
  1,958
  2,049
  2,146
  2,247
  2,354
  2,467
  2,585
  2,710
  2,841
  2,980
Funds from operations, $m
  3,635
  3,444
  3,517
  3,602
  3,697
  3,802
  3,918
  4,043
  4,179
  4,324
  4,481
  4,648
  4,827
  5,017
  5,219
  5,433
  5,660
  5,900
  6,154
  6,422
  6,705
  7,004
  7,319
  7,651
  8,001
  8,370
  8,758
  9,166
  9,596
  10,048
  10,523
Change in working capital, $m
  -215
  6
  7
  8
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  20
  21
  22
  23
  25
  26
  27
  29
  31
  32
  34
  36
  38
  40
  42
  44
  46
Cash from operations, $m
  3,850
  3,854
  3,510
  3,594
  3,688
  3,792
  3,907
  4,031
  4,165
  4,310
  4,466
  4,632
  4,810
  4,999
  5,199
  5,412
  5,638
  5,877
  6,129
  6,396
  6,678
  6,975
  7,289
  7,619
  7,967
  8,334
  8,720
  9,126
  9,554
  10,004
  10,477
Maintenance CAPEX, $m
  0
  -908
  -926
  -948
  -972
  -1,000
  -1,030
  -1,063
  -1,099
  -1,138
  -1,181
  -1,226
  -1,274
  -1,326
  -1,381
  -1,440
  -1,502
  -1,568
  -1,637
  -1,711
  -1,789
  -1,871
  -1,958
  -2,049
  -2,146
  -2,247
  -2,354
  -2,467
  -2,585
  -2,710
  -2,841
New CAPEX, $m
  -1,995
  -491
  -577
  -660
  -741
  -821
  -901
  -981
  -1,062
  -1,144
  -1,228
  -1,314
  -1,402
  -1,492
  -1,586
  -1,683
  -1,784
  -1,888
  -1,997
  -2,110
  -2,227
  -2,350
  -2,479
  -2,613
  -2,753
  -2,899
  -3,053
  -3,213
  -3,381
  -3,557
  -3,741
Cash from investing activities, $m
  -1,965
  -1,399
  -1,503
  -1,608
  -1,713
  -1,821
  -1,931
  -2,044
  -2,161
  -2,282
  -2,409
  -2,540
  -2,676
  -2,818
  -2,967
  -3,123
  -3,286
  -3,456
  -3,634
  -3,821
  -4,016
  -4,221
  -4,437
  -4,662
  -4,899
  -5,146
  -5,407
  -5,680
  -5,966
  -6,267
  -6,582
Free cash flow, $m
  1,885
  2,454
  2,006
  1,986
  1,975
  1,972
  1,976
  1,987
  2,004
  2,028
  2,057
  2,093
  2,133
  2,180
  2,232
  2,289
  2,352
  2,421
  2,495
  2,575
  2,662
  2,754
  2,852
  2,957
  3,069
  3,187
  3,313
  3,446
  3,587
  3,737
  3,894
Issuance/(repayment) of debt, $m
  511
  356
  383
  438
  492
  545
  598
  651
  705
  760
  815
  872
  931
  991
  1,053
  1,117
  1,184
  1,253
  1,326
  1,401
  1,479
  1,560
  1,646
  1,735
  1,828
  1,925
  2,027
  2,133
  2,245
  2,362
  2,484
Issuance/(repurchase) of shares, $m
  -1,485
  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  
  -1,021
  356
  383
  438
  492
  545
  598
  651
  705
  760
  815
  872
  931
  991
  1,053
  1,117
  1,184
  1,253
  1,326
  1,401
  1,479
  1,560
  1,646
  1,735
  1,828
  1,925
  2,027
  2,133
  2,245
  2,362
  2,484
Total cash flow (excl. dividends), $m
  875
  2,810
  2,389
  2,424
  2,467
  2,517
  2,574
  2,638
  2,709
  2,787
  2,873
  2,965
  3,064
  3,171
  3,285
  3,407
  3,537
  3,674
  3,821
  3,976
  4,140
  4,314
  4,498
  4,692
  4,896
  5,112
  5,340
  5,580
  5,832
  6,098
  6,378
Retained Cash Flow (-), $m
  80
  -221
  -258
  -295
  -331
  -366
  -402
  -438
  -474
  -511
  -548
  -586
  -626
  -666
  -708
  -751
  -796
  -843
  -891
  -942
  -994
  -1,049
  -1,106
  -1,166
  -1,229
  -1,294
  -1,362
  -1,434
  -1,509
  -1,588
  -1,670
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
 
  2,590
  2,132
  2,130
  2,136
  2,150
  2,172
  2,200
  2,235
  2,277
  2,325
  2,378
  2,438
  2,505
  2,577
  2,656
  2,740
  2,832
  2,930
  3,035
  3,146
  3,265
  3,392
  3,526
  3,668
  3,818
  3,977
  4,146
  4,323
  4,511
  4,708
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
 
  2,457
  1,909
  1,791
  1,676
  1,565
  1,456
  1,349
  1,244
  1,141
  1,040
  941
  845
  752
  663
  579
  499
  426
  359
  298
  244
  196
  155
  121
  92
  69
  51
  36
  25
  17
  11
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 (CNI)

Valuation Ratios
P/E Ratio 21.4
Price to Sales 6.5
Price to Book 5.2
Price to Tangible Book
Price to Cash Flow 15
Price to Free Cash Flow 31
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%

CNI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CNI stock intrinsic value calculation we used $8909 million for the last fiscal year's total revenue generated by Canadian National Railway. The default revenue input number comes from 2016 income statement of Canadian National Railway. 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 CNI 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 CNI is calculated based on our internal credit rating of Canadian National Railway, 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.
    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 CNI 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 CNI 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.

Corporate tax rate of 27% is the nominal tax rate for Canadian National Railway. 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 CNI 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 CNI 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 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 CNI 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 - $10985 million for Canadian National Railway - 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 758.42 million for Canadian National Railway 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 at the current share price and the inputted number of shares is $57.3 billion.


Premium access subscription - $499/yr

please register and log in before paying
RELATED COMPANIES Price Int.Val. Rating
CP Canadian Pacif 157.29 prem.  prem.
GWR Genesee&Wyomin 64.63 prem.  prem.
UNP Union Pacific 108.00 prem.  prem.
CSX CSX 51.80 prem.  prem.
KSU Kansas City So 90.54 prem.  prem.
NSC Norfolk Southe 114.37 prem.  prem.

COMPANY NEWS

▶ Canadian US Freight Rail Traffic Rose in Week 19   [May-23-17 04:10PM  Market Realist]
▶ CN's JJ Ruest inducted into Maritime Hall of Fame   [May-11-17 06:00PM  PR Newswire]
▶ Coal Boosts Canadian Pacifics Volumes in Week 17   [May-10-17 09:06AM  Market Realist]
▶ Analyzing Canadian National Railways Intermodal Volumes   [May-08-17 05:06PM  Market Realist]
▶ Growth in US Freight Rail Traffic in Week 17   [03:35PM  Market Realist]
▶ Coals Rise Pushed Up Canadian Pacifics Carloads in Week 16   [May-02-17 09:06AM  Market Realist]
▶ New CN Grain Insight podcast now available   [May-01-17 04:40PM  CNW Group]
▶ US Carloads Surged, Intermodal Lagged in Week 16   [Apr-28-17 03:32PM  Market Realist]
▶ CN announces election of directors   [Apr-25-17 03:45PM  PR Newswire]
▶ CN beats Street 1Q forecasts   [04:31PM  Associated Press]
▶ CN declares second-quarter 2017 dividend   [04:02PM  PR Newswire]
▶ Canadian National Railway: The Class I Freight Story   [Apr-19-17 10:36AM  Market Realist]
▶ Week 14: US Freight Rail Traffic Offers a Ray of Hope   [Apr-18-17 02:15PM  Market Realist]
▶ [$$] Canadian Railroad Earnings: What to Watch   [01:47PM  The Wall Street Journal]
▶ US Freight Rail Volumes SurgeIs a Recovery in Sight?   [Apr-10-17 03:34PM  Market Realist]
▶ US Freight Rail Traffic Grew in Double Digits Last Week   [Mar-31-17 03:38PM  Market Realist]
▶ 2 Stocks You Can Buy and Hold Forever   [09:50AM  at Motley Fool]
Stock chart of CNI Financial statements of CNI
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

FREE DOWNLOAD
Follow us on:   twitter   twitter   twitter   twitter

VALUATION THEORY       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2017. All rigths reserved.