Q: If one were to compare CNR and CP.
1. in your opinion which one has better valuation?
2. in your opinion do you think they will be significantly negatively impacted with Trumps policies?
3. in your opinion which railway will be effected the least?
1. in your opinion which one has better valuation?
2. in your opinion do you think they will be significantly negatively impacted with Trumps policies?
3. in your opinion which railway will be effected the least?
5i Research Answer:
We think both are trading at fair valuations, though CP is trading at a premium multiple of 22.2x Forward P/E, and CNR is trading at 19.2x Forward P/E. This is mainly because of CP’s superior track record of operational efficiency and stronger organic growth. Both companies operated under different administrations for decades; we don’t think one president could affect the long-term value of these businesses. That being said, CP has more exposure to the US market after its recent acquisition of Kansas Southern City. In our opinion, CNR could be mildly affected because of Trump’s presidency, if at all.