BMO Capital has maintained its Outperform rating on Canadian National Railway (NYSE:CNI) and set a price objective of $158.00, markedly above the current share price of $94.94. The firm points to robust margin performance and free cash flow metrics as reasons to favour the stock, even with headwinds expected in the coming year.
In a review of the company’s results, BMO highlighted that Canadian National’s adjusted fourth-quarter performance for 2025 surpassed both its own forecasts and consensus estimates, a beat the research house attributes primarily to meaningful productivity improvements. The company reported strong profitability metrics, with gross profit margins of 56.47% and trailing-twelve-month revenue of $12.61 billion.
Despite the favorable quarterly showing, BMO and management flag several challenges for 2026. Guidance provided by the company points to essentially flat volume growth for the year. Management also cited ongoing inflationary pressures and foreign exchange headwinds as factors that will complicate the operating environment. Against that backdrop, BMO notes limited upside to results absent a recovery in freight volumes.
Market data referenced by BMO indicates some analyst downgrades to near-term earnings expectations - InvestingPro shows 10 analysts have revised their earnings forecasts down for the upcoming period - and the stock is trading close to its 52-week low. The company’s own guidance suggests 2026 earnings-per-share growth will modestly outpace volume growth, and current EPS forecasts for FY2026 stand at $5.72 versus $5.52 over the prior twelve months.
From a valuation perspective, BMO views Canadian National as attractively priced relative to its cash generation. The research note highlights a mid-single-digit free cash flow yield that "screens inexpensive," particularly given what the firm describes as the current trough in the freight cycle. Supporting that view, InvestingPro analysis cited by BMO indicates CNI appears undervalued on a Fair Value basis and reports a free cash flow yield of 4%.
Company-reported results for the fourth quarter of 2025 showed an uptick in earnings, with quarterly adjusted EPS of C$2.08, ahead of the consensus of C$1.98. The quarter’s adjusted EPS rose 14% year-over-year, and full-year EPS increased by 7%. Despite those beats, the board and management retained a cautious tone for 2026 given the expected flat volumes and tariff impacts highlighted in their outlook.
Other sell-side reactions to the results have been mixed. Benchmark maintained a Hold rating after the fourth-quarter report, while Stephens lowered its price target on Canadian National to $100.00 from $105.00 but kept an Equal Weight rating, citing a muted volume outlook.
On the corporate calendar, Canadian National’s chief financial officer, Ghislain Houle, is scheduled to present at Citi’s 2026 Global Industrial Tech and Mobility Conference. The company plans to webcast the presentation live via its website.
Note: The foregoing summarizes recent analyst commentary, company results and guidance as reported by the firm and referenced research services. It does not include valuation judgments beyond those explicitly stated by the named analysts and data providers.