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Analyst Estimates: Here's What Brokers Think Of Canadian National Railway Company (TSE:CNR) After Its Annual Report

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Simply Wall St
·4 min read
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Investors in Canadian National Railway Company (TSE:CNR) had a good week, as its shares rose 3.0% to close at CA$134 following the release of its annual results. It was a credible result overall, with revenues of CA$14b and statutory earnings per share of CA$5.00 both in line with analyst estimates, showing that Canadian National Railway is executing in line with expectations. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

View our latest analysis for Canadian National Railway

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earnings-and-revenue-growth

Taking into account the latest results, the current consensus from Canadian National Railway's 25 analysts is for revenues of CA$14.8b in 2021, which would reflect a satisfactory 6.9% increase on its sales over the past 12 months. Statutory earnings per share are predicted to climb 18% to CA$5.92. Before this earnings report, the analysts had been forecasting revenues of CA$15.1b and earnings per share (EPS) of CA$6.21 in 2021. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a small dip in earnings per share estimates.

The analysts made no major changes to their price target of CA$142, suggesting the downgrades are not expected to have a long-term impact on Canadian National Railway's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Canadian National Railway, with the most bullish analyst valuing it at CA$160 and the most bearish at CA$114 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Canadian National Railway's past performance and to peers in the same industry. The analysts are definitely expecting Canadian National Railway's growth to accelerate, with the forecast 6.9% growth ranking favourably alongside historical growth of 4.2% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 6.9% next year. Canadian National Railway is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Sadly, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the industry itself. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on Canadian National Railway. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Canadian National Railway going out to 2025, and you can see them free on our platform here..

Before you take the next step you should know about the 2 warning signs for Canadian National Railway that we have uncovered.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.