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Canadian National Railway Company Case Analysis

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Canadian National Railway Company-
Shares of Canadian National Railway (NYSE: CNI) have risen about 20% to the current level of $57.02 from its 52 weeks low of $47.62 on January 20, 2016. In my opinion, this trend will continue for the rest of the year due to the fact that the company is making various moves to support its growth during this weakness in the energy-related commodities. These moves include accelerated growth in its Franchise business, investment in the long-term growth platforms, debt offering, and increase in operating cash flows due to diversified portfolio.
Earlier last month, the company had reported fourth-quarter and full year 2015 results that outpaced its railroad peer, Canadian Pacific (CP). Canadian National’s revenue rose 4% to C$12.6 billion, whereas Canadian Pacific saw its revenue growing by just 1% for the fiscal year 2015. In reality, the other Class I railroad companies such as Norfolk Southern, CSX, and Union Pacific experienced drop in their revenue by 9.6%, 6.8% and 9% respectively for the year.
More importantly, its fourth-quarterly results were even more appealing. Despite drop in its revenue by 1%, CNI managed to record a 15% rise in the earnings per share year-on-year basis for the quarter. This growth in the earnings per share can be attributed to its efforts of …show more content…

Its cash from operation for the quarter increased 11% and for the year 17% year-on-year basis. This strong growth for its operating cash flow has come in spite of CNI’s payment to net interest of approximately $119 million for the quarter and $439 for the year. In consequence of this strong operating cash flow, the company generated free cash flow of C$632 million for the quarter and approximately C$2.3 billion for the full year, up notably from the prior year periods as shown in the table

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