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  5. CNR: Hello, 5i Research group, how was your take on the CNR's & CP's recent earnings? [Canadian National Railway Company]
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Q: Hello, 5i Research group, how was your take on the CNR's & CP's recent earnings? which one has more upside in next couple of years?

Thanks,
Asked by Lin on April 27, 2023
5i Research Answer:

Both CNR and CP have decent quarters which demonstrate the significant pricing power of the railroads and operational excellence of the Canadian railroad compared to US peers.

CNR is now trading at 20.1x times' Forward P/E. In 1Q-2023, CNR’s revenue grew 16% to $4.3B, beating the estimates of $4.25B and EPS is $1.82 also beating estimates of $1.72. Based on consensus estimates, sales are expected to grow by 3%-5% in the next few years.
Meanwhile, CP now trading at 24.5x times' Forward P/E. See this answer for earnings comments. Based on consensus estimates, sales are expected to grow significantly by 50% in 2023 due to the acquisition of KSU, then expect to grow by 8%-10% in the next few years along with tremendous expected cost synergies as a result of the integration.
Both are reasonably priced. However, we would side with CP for more upside potential.