Section1: Company Overview and Fundamental Insights

1.1 Company Overview:

Canadian National Railway Company (TSX: CNR) is a world-class transportation leader and trade-enabler. Essential to the economy, to the customers, and to the communities it serves, the company safely transports more than 300 million tons of natural resources, manufactured products, and finished goods throughout North America every year. As the only railroad connecting Canada’s Eastern and Western coasts with the U.S. South through a 18,600-mile rail network.

1.2 The Key Positives, Negatives, Investment Highlights and Risks

1.3 Top 10 Shareholders:

The top 10 shareholders together form ~32.45% of the total shareholding. Bill & Melinda Gates Foundation Trust and TCI Fund Management Limited, hold a maximum stake in the company at ~­­­8.07% and ~5.40%, respectively.

1.4 Key Metrics:

The company reported decent growth in the revenues and net income, while the net income has witnessed sequential growth, which is a key positive. Furthermore, its operating margin figures are growing sequentially and beating the industry median numbers, another significant plus. The company also managed to increase its freight revenue per carload. These increasing numbers aided the company in generating elevated free cash flows, proving its resilience and agility.

Section 2: Business Updates and Financial Highlights

2.1 Recent Updates: The below picture gives an overview of its recent activities, such as improving macros, rise in debt and dividend distribution:

2.2 Insights of Q2 2022 Financial Performance:

Section 3: Key Risks, Company Outlook:

Section 4: Stock Recommendation Summary:

4.1 Price Performance and Technical Summary:

4.2 Fundamental Valuation

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)

Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is Oct 19, 2022. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Technical Indicators Defined:

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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Disclaimer

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