Canadian National Railway Company Common Stock (CNI) fair value

ACCE thesis

Canadian National Railway runs a continent-spanning freight network, moving bulk commodities such as grain, potash, coal and forest products, along with intermodal containers and automotive loads across Canada, the US Midwest and Gulf Coast. Its moat is the rail corridor itself: a network that is extremely costly and slow to replicate, combined with a 40.3% operating margin and a 56.0% gross margin that show the pricing power this scarcity supports. Revenue grew 11.3% and return on equity is 22.0%, so the business is compounding on a capital base that is hard for competitors to copy. The multiple is the more modest part of the story, with a forward P/E of 18.9 against a trailing 21.1, implying earnings are expected to keep rising. Whether that growth holds through a freight downturn or a labour disruption is the question to test before any position is sized, and the $72.9B market cap makes it a large, liquid name worth a deeper look.