Valued at a market cap of $85.7 billion, Canadian National Railway (TSX:CNR) is among the largest railroad companies in the world. In the last decade, CNR stock has returned 132% to shareholders after adjusting for dividend reinvestments. However, it has underperformed the TSX index, which is up 265% since January 2016.
While the TSX index is trading near all-time highs, CNR stock is down 19% from all-time highs, allowing you to buy the dip. So, let’s see if CNR stock is a good buy right now.
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Should you invest in CNR stock in 2026?
Canadian National Railway operates rail, intermodal, and trucking services across Canada and the United States. The company transports a wide range of cargo, including automotive, coal, grain, chemicals, and temperature-controlled goods.
CNR provides comprehensive logistics solutions, including door-to-door delivery, customs brokerage, warehousing, and supply chain management for Fortune 500 clients and third-party logistics customers.
Canadian National Railway is navigating a prolonged freight recession and is focusing on aggressive cost-cutting measures and operational efficiency improvements. This positions the railroad giant for a strong rebound when economic conditions improve.
- In Q3, it improved the operating ratio by 170 basis points to 61.4%, despite flat volumes, which showcases tight cost control in a challenging environment.
- CN announced a $75 million cost-reduction initiative that targets management positions while protecting frontline supervisors.
- The company currently has over 700 train crew members on furlough, but reported a 90% success rate in recalling workers for the record Canadian grain crop movement.
This selective approach reflects lessons learned from earlier workforce challenges when recalled employees didn’t return.
CNR is reducing capital expenditures for 2026 to $2.8 billion, down $550 million from current levels. The reduction comes after years of heavy investment in capacity expansion, particularly on the critical Edson subdivision in Western Canada, which now features 63% double tracking.
The company’s locomotive fleet has been modernized, reducing its average age from 24 to 19 years, placing CN in the middle of industry standards.
November volumes surged 15% year over year, though comparisons benefit from lapping last year’s West Coast longshoreman strike. Intermodal, petroleum, chemicals, and frac sand are performing well, while lumber faces severe headwinds from 45% tariffs, and iron ore volumes declined following the closure of the Cleveland-Cliffs Minorca mine.
Current lumber orders of 1,300 center beam cars compare poorly to the 2,200 to 2,300 typical in healthy markets.
CN retired eight million shares for over $1 billion in the third quarter, taking advantage of what management views as an undervalued stock price. The company maintains 2.5 times leverage but is reconsidering whether its balance sheet could support higher levels, given peer comparisons and the current mergers-and-acquisitions environment.
New Chief Commercial Officer Janet Drysdale is implementing an aggressive boots-on-the-ground sales strategy with faster rate quotes and greater pricing authority for field personnel.
The approach aims to capture every available carload opportunity while the network has significant latent capacity. Management expects to deliver full-year guidance toward the lower end of ranges, with a focus on productivity improvements until macroeconomic conditions normalize.
What is the CNR stock price target?
Analysts forecast CNR’s adjusted earnings per share to improve from $7.10 in 2024 to $11 in 2029. Comparatively, its free cash flow is projected to increase from $3.15 billion to $4.45 billion in this period.
The blue-chip TSX stock trades at a forward price-to-earnings multiple of 17.7 times, below its 10-year average of 19.4 times. At the current multiple, CNR stock will trade around $194 in late 2028, indicating an upside potential of 41% from current levels. If we adjust for dividends, cumulative returns will be closer to 50%.
