Canadian National Railway Company updated June 5, 2017

CN Rail is updated and rated Weak Sell / Hold. It’s a great company but seems expensive at this time (as it usually does). It had some weakness in carloadings in 2016 but carloadings have rebounded very strongly in Q1 and now Q2 as well. I expect it to report a good increase in earnings in Q2 and possibly through 2017. Still, with a P/E of 22 and a dividend yield of only 1.6% it seems expensive. I am not inclined to buy at this time. I was too pessimistic on the company at the last update (see December 29, 2016) in good part because I understood from the company’s 2016 earnings forecast as of Q3 that they were expecting an 8% decline in Q4. Perhaps I misunderstood and/or the year ended off much more strongly than the company expected. It seems clear that the carloadings in Q1 and now Q2 were unexpectedly strong. Carloadings are up double digits from 2016 although not that much higher than 2015.

The strong carload figures at CN bodes well for the performance of the Canadian economy in general. Things are increasingly on the move, it seems.