Q: Good day! Many thanks to 5i providing a rudder (and sometimes an anchor) on this rollicking journey.
I have been slowly accumulating CNR for the past couple of years and am now considering whether CP is better positioned over the next decade. I am currently down 8%.
Can I get 5i’s opinion on CN vs CP given each company’s
-past performance,
-quality of management,
-valuations,
-EPS growth projections
-CAN-US trade gyrations
-any other material factors
Thank you!
I have been slowly accumulating CNR for the past couple of years and am now considering whether CP is better positioned over the next decade. I am currently down 8%.
Can I get 5i’s opinion on CN vs CP given each company’s
-past performance,
-quality of management,
-valuations,
-EPS growth projections
-CAN-US trade gyrations
-any other material factors
Thank you!
5i Research Answer:
We have (marginally) favoured CNR as CP needed to consolidate its very large Kansas City acquisition.
If we look at 20 year returns: CP is up 870%; CNR 523% ,not including dividends. Recent performance is similar for the two. We would give management fairly equal marks. CNR is 17.6X earnings with a 2.53% dividend. CP is 20.6X and 0.76%. CNR is expected to show 15% growth, CP very close to the same this year. Both may see some economic slowdown, of course. CNR has a much better dividend growth record. Debt/cash flow is about 4X at CP and 3X at CNR. We would be happy with either. CNR's lower valuation and lower leverage still we think makes it slightly more interesting.