Q: I hold CNR. Thinking of switching to MTL for a couple reasons. MTL seems to have better growth prospects and a better dividend Your thoughts?
I'll post this to the Canadian Equities Forum if anyone else has a comment.
I'll post this to the Canadian Equities Forum if anyone else has a comment.
5i Research Answer:
We would not advise this. MTL has occasionally done M&A to drive growth, however as it stands, analyst outlook only calls for top and bottom line growth of 3%-5% over the next few years. In general MTL has not been a high growth name either. It is cheap however, at 11.8x forward earnings and pays a high yield at 5.5%. We think CNR is a higher quality name overall with a more stable growth outlook where analysts are calling for EPS growth of 12% and revenue growth 6% over the next two years. CNR pays a lower yield at 2.30%, but we think its risk-reward profile is much more attractive than MTL's.