When you think of iconic Canadian companies, Canadian National Railway (TSX:CNR) usually makes the list. It’s not flashy, but it’s reliable. In a market filled with tech hype and energy price swings, sometimes it’s the boring businesses that quietly build wealth. With worries about inflation and economic slowdowns still looming, many investors are taking a fresh look at transportation stocks like CNR. So, is it a buy right now?
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Recent performance
Canadian National Railway runs the largest rail network in Canada, moving everything from coal and grain to cars and intermodal freight. Its tracks stretch from coast to coast and deep into the U.S. Midwest. That makes it a crucial player in North American supply chains. Because of this scale, it has pricing power and efficiency that few companies can match.
In the first quarter (Q1) of 2025, Canadian National reported revenue of $4.4 billion, up 4% from the year before. Operating income rose to $1.61 billion, a 4% increase as well. Net income came in at $1.16 billion, or $1.85 per diluted share. That marked an 8% jump from last year and beat analyst expectations. These are not eye-popping numbers, but they’re steady and dependable, just what you want from a long-term investment.
The company also delivered strong free cash flow, topping $600 million during the quarter. That’s important because it gives Canadian National the ability to reinvest in its rail network, buy back shares, and pay dividends. In Q1, the Canadian stock spent more than $100 million on share repurchases and continued to invest in capital improvements. These aren’t short-term moves; they’re the kind of disciplined, forward-thinking strategies that keep the company strong year after year.
Value and income
The operating ratio, a key measure of efficiency in the rail industry, improved slightly to 63.4%. A lower number here means better margins. The Canadian stock has done well to keep costs under control, even as fuel and labour costs have pressured other businesses. Volumes were also stable, with revenue ton-miles rising by 1%. The real growth came from pricing power, as rates increased on a per-ton basis.
Beyond the numbers, Canadian National has been expanding its reach. It recently received approval to acquire Iowa Northern Railway, which helps strengthen its U.S. footprint. That’s a smart move, as it could open the door to more long-haul business in the Midwest and reduce dependency on any single commodity or region. The Canadian stock also showed resilience last year when it quickly resolved a brief lockout, minimizing service disruptions and keeping operations running smoothly.
As of now, the Canadian stock trades around $140 and offers a dividend yield of about 2.5%. That’s not huge, but it’s safe. The dividend is well supported by earnings and free cash flow. Plus, with regular share buybacks, the company is slowly increasing the value of each remaining share over time. That’s a nice bonus for long-term investors.
Bottom line
Valuation-wise, Canadian National is not cheap, but it’s not overpriced either. Based on trailing earnings of roughly $7.40 per share, the stock trades at a price-to-earnings ratio of around 19.66 at writing. That’s fair for a Canadian stock with a strong moat, stable cash flow, and a long history of delivering shareholder value.
There are risks, of course. A slowdown in global trade or a drop in commodity shipments could weigh on results. Rising interest rates and inflation also remain a threat. But the Canadian stock has weathered tough times before. Its business model is built for resilience.
Canadian National might not make headlines, but it quietly does its job. It delivers goods across the continent, generates reliable earnings, and returns cash to shareholders. For investors who want a strong core holding in their portfolio, CNR looks like a solid choice. It won’t be the fastest mover, but it offers peace of mind, and in today’s market, that’s worth a lot.
