AI Stock Analysis: Is CNI a Buy?

June 24, 7:05 am

Canadian National Railway (CNR) is a leading North American transportation and logistics company. It operates an extensive rail network spanning Canada and the United States, providing freight transportation services across a diverse range of industries including petroleum, chemicals, grain, intermodal, and automotive. The company is headquartered in Montreal, Quebec, and is recognized for its efficiency and investments in technology, which have contributed to its reputation as one of the most operationally efficient railroads globally.

Price & AI Score for CNI.

Fundamental Analysis

The most recent revenue figures for Canadian National Railway show a considerable increase. Last quarter, revenue reached $5.73 billion, indicating an increase of 28.16% from the previous quarter and a robust year-over-year growth of 32.86%. This signifies positive growth and an expanding business.

However, the net income for the previous quarter was $1.49 billion, a decrease of 30.16% compared to the preceding quarter. Nonetheless, this represents an annual increase of 21.93%, suggesting long-term improvement and efficiency despite recent quarterly decline.

Canadian National's EBITDA saw a quarter-over-quarter rise of 36.28%, totaling $2.71 billion. Year-over-year, the EBITDA grew by 13.73%, further underscoring the company’s operational efficiency and success in generating earnings before accounting for taxes, interest, depreciation, and amortization.

The P/E ratio currently stands at 18.99, a figure that indicates the stock is reasonably valued within the market. The ratio is within a normal range, implying that the stock neither appears overpriced nor undervalued based on earnings performance.

Technical Analysis

The present stock price of Canadian National Railway is $118.52. The price represents a decrease of 6.15% from a month ago, reflecting short-term downward movement that may cause concern for some investors. However, when viewed over the past year, the stock price demonstrates an increase of 2.69%, suggesting a favorable long-term trend.

Despite this, the overall trend has been bearish. The current SMA10 (Simple Moving Average over 10 days) is $118.81, which is lower than the previous SMA10 of $119.15, indicating a possible continuous downward trend in price movement.

The RSI (Relative Strength Index) sits at 39.8, suggesting a neutral condition. The RSI typically ranges between 0 and 100, with a reading below 30 indicating an oversold condition, and above 70 signaling an overbought situation. The current RSI close to 40 aligns more with a neutral or slightly bearish sentiment.

Alternative Data Analysis

Regarding job postings and employee sentiment, Canadian National Railway has 435 open positions, a decrease of 28% in recent months. This reduction might indicate efforts to improve margins or cut costs, not ideal for a company wanting to rapidly expand.

Employee sentiment is neutral, another indication that internal stakeholders do not foresee significant immediate changes, either positive or negative.

In terms of customer acquisition, the estimated number of visitors to their webpage rose by 72% in the last few months, reaching 760,000. This significant increase could suggest a burgeoning increase in customer interest or digital engagement, a bullish indicator.

In contrast, there are no meaningful changes in the daily downloads of their mobile app, which stays at zero. This static scenario does not provide much insight into digital engagement through mobile applications.

On the other side, customer engagement as reflected in social media activity is growing. The number of Instagram followers for Canadian National Railway increased by 4% to 14,000, showing rising interest. Concurrently, their Twitter following shows stability with 22,000 followers, with no meaningful changes in recent months.

Furthermore, the AltIndex’s AI score for Canadian National Railway is 63, which signals a buy recommendation. This score is calculated by considering fundamental, technical, and alternative data analysis factors.

Conclusion

Based on the compiled data from fundamental, technical, and alternative data analyses, Canadian National Railway exhibits strong long-term growth potential despite some short-term challenges. The substantial increase in both revenue and EBITDA indicates robust operational performance, while the neutral P/E ratio suggests the stock is properly valued.

The technical indicators denote a short-term bearish trend, which may concern some investors looking for immediate gains. On the alternative data front, digital engagement metrics reflect positive customer acquisition trends, although job postings and employee sentiment indicate potential constraints on rapid scaling.

Considering these factors, my recommendation leans towards a "Buy" for investors with a long-term perspective, supported by the company’s solid fundamentals and a favorable AI score of 63. However, short-term traders might want to monitor the stock closely for potential downward fluctuations.

Disclaimer: This article, generated by an experimental AI tool, is for informational purposes only and not financial advice. Information is based on publicly available data and may not always be accurate or current. Visit CNI AI Stock Analysis for a more up-to-date analysis.

Get More Insights

Sign up and get access to a personalized dashboard, deeper insights, AI stock picks, stock alerts, weekly newsletter and much more.