Canadian National Railway (TSX:CNR) Stock Looks Stretched On Cash Flow But Reasonable On Earnings

Canadian National Railway (TSX:CNR) has delivered a 42.5% total return over the past five years, but a cash-flow-focused view suggests the stock may be trading above an intrinsic value estimate. A discounted cash flow (DCF) model puts the latest 12-month free cash flow at about CA$3.5 billion, leading to an intrinsic value estimate around CA$157 per share, below the current price. On this method, CNR screens as about 13.7% overvalued. The report also notes the company’s progress on hybrid locomotives and record grain volumes, which could support longer-term cash flows, even as macro risks and operating costs may cap valuation. On earnings, the shares trade at roughly 22.6x, higher than the Transportation industry average of 13.4x but below a peer average near 31.1x.