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Here's Why You Should Retain Canadian National (CNI) Stock Now
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Canadian National Railway Company (CNI - Free Report) stock has moved up 7.4% in the year-to-date period compared with 1% growth of the industry it belongs to.
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For 2021 and 2022, earnings are expected to grow at a rate of 15.6% and 16.8%, respectively, on a year-over-year basis. Revenues for the current year are anticipated to rise 11.6% on a year-over-year basis.
Key Growth Drivers
Canadian National’s performance with respect to grain transportation is impressive. The company moved more than 31 million metric tonnes (MMT) of Canadian grain via carloads during the 2020-2021 crop year. Owing to this superlative movement, the company bested its previous record set in crop year 2019-20 when it moved 29.4 MMT via carload. We expect the company to continue performing well with respect to grain transportation in crop year 2021-2022, despite a rise in delta variant cases in the United States.
The company's efforts to reward its shareholders is commendable. To this end, the company's board approved a 7% increase in its quarterly dividend to C$0.615 in January 2021. In fact, the current increase marks the 25th consecutive year wherein the company resorted to a dividend hike. Despite the ongoing turbulence, its decision to hike its dividend payment is encouraging. In first-half 2021, the company generated free cash flow to the tune of C$1.28 billion. The company estimates free cash flow in the range of C$3-C$3.3 billion for the current year compared with C$3.2 billion in 2020. The company is also active on the buyback front. Canadian National aims to complete its remaining share repurchases (C$1.1 billion) by the end of Jan 31, 2022. In another shareholder-friendly move, the company intends to expand its buyback program to as much as C$5 billion next year.
Primary Concern
Canadian National’s liquidity position is concerning. At the end of the second quarter, the company’s cash and cash equivalents stood at $891 million, lower than the current debt level of $1,286 million. The company's current ratio (a measure of liquidity) at the end of the June quarter was 0.93. A current ratio of less than 1 is not desirable, as it indicates that the company may have problems in meeting short-term obligations.
Zacks Rank & Stocks to Consider
Canadian National currently carries a Zacks Rank #3 (Hold).
Long-term expected earnings per share (three to five years) growth rate for Schneider National, Werner and Landstar is pegged at 17.9%, 13.1% and 12%, respectively.
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Here's Why You Should Retain Canadian National (CNI) Stock Now
Canadian National Railway Company (CNI - Free Report) stock has moved up 7.4% in the year-to-date period compared with 1% growth of the industry it belongs to.
For 2021 and 2022, earnings are expected to grow at a rate of 15.6% and 16.8%, respectively, on a year-over-year basis. Revenues for the current year are anticipated to rise 11.6% on a year-over-year basis.
Key Growth Drivers
Canadian National’s performance with respect to grain transportation is impressive. The company moved more than 31 million metric tonnes (MMT) of Canadian grain via carloads during the 2020-2021 crop year. Owing to this superlative movement, the company bested its previous record set in crop year 2019-20 when it moved 29.4 MMT via carload. We expect the company to continue performing well with respect to grain transportation in crop year 2021-2022, despite a rise in delta variant cases in the United States.
The company's efforts to reward its shareholders is commendable. To this end, the company's board approved a 7% increase in its quarterly dividend to C$0.615 in January 2021. In fact, the current increase marks the 25th consecutive year wherein the company resorted to a dividend hike. Despite the ongoing turbulence, its decision to hike its dividend payment is encouraging. In first-half 2021, the company generated free cash flow to the tune of C$1.28 billion. The company estimates free cash flow in the range of C$3-C$3.3 billion for the current year compared with C$3.2 billion in 2020. The company is also active on the buyback front. Canadian National aims to complete its remaining share repurchases (C$1.1 billion) by the end of Jan 31, 2022. In another shareholder-friendly move, the company intends to expand its buyback program to as much as C$5 billion next year.
Primary Concern
Canadian National’s liquidity position is concerning. At the end of the second quarter, the company’s cash and cash equivalents stood at $891 million, lower than the current debt level of $1,286 million. The company's current ratio (a measure of liquidity) at the end of the June quarter was 0.93. A current ratio of less than 1 is not desirable, as it indicates that the company may have problems in meeting short-term obligations.
Zacks Rank & Stocks to Consider
Canadian National currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Zacks Transportation sector are Schneider National, Inc. (SNDR - Free Report) , Werner Enterprises, Inc. (WERN - Free Report) and Landstar System, Inc. (LSTR - Free Report) . All the stocks carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1(Strong Buy) Rank stocks here.
Long-term expected earnings per share (three to five years) growth rate for Schneider National, Werner and Landstar is pegged at 17.9%, 13.1% and 12%, respectively.