Canadian National Railway (TSX:CNR) Could Be 7% Below Fair Value Following Record Grain Volumes

Canadian National Railway (TSX:CNR) is back in focus after reporting a record 33.8 million metric tons of grain moved from Western Canada in the 2025-26 crop year and outlining its 2026-27 Grain Plan.

See our latest analysis for Canadian National Railway.

The record grain volumes and new 2026-27 Grain Plan arrive during a strong period for Canadian National Railway, with the share price at CA$177.78 and a 90 day share price return of 15.51%, while the 1 year total shareholder return of 42.30% signals momentum that has built over time rather than in just a single quarter.

If this kind of operational update has you thinking about other transport and infrastructure related themes, it can be useful to see what else is moving in connected areas of the market with 35 power grid technology and infrastructure stocks

After a move like this and with Canadian National Railway now at CA$177.78, the puzzle is whether the recent strength still leaves enough upside to compensate for the risks buyers take on from here.

Most Popular Narrative: 6.5% Undervalued

The most followed narrative currently places Canadian National Railway's fair value at about CA$190.11, a touch above the last close of CA$177.78. This frames the latest share price strength in a tighter valuation range than headlines alone might suggest.

CN continues to deliver same-store pricing above rail cost inflation and is leveraging strong network performance to win market share in domestic intermodal, suggesting pricing power and improved margin potential as volumes return. Rigorous cost discipline, including flexible workforce management and automation-driven operational efficiency, is enabling CN to maintain and even expand net margins and operating ratio, setting up the business for accelerated earnings growth once volume headwinds normalize.

Read the complete narrative.

Want to see what sits behind that pricing power story? The narrative leans heavily on revenue growth, fatter margins, and a future earnings multiple that has to hold up. The key question is which of those drivers really does the lifting in the fair value math.

Result: Fair Value of CA$190.11 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, investors in Canadian National Railway still need to weigh weaker industrial demand, as well as potential freight rerouting from trade or routing shifts that pressure volumes and margins.

Find out about the key risks to this Canadian National Railway narrative.

Another View: Canadian National Railway Through Cash Flows

Analysts see Canadian National Railway as about 6.5% undervalued at CA$190.11, but the SWS DCF model points in the other direction. On this cash flow view, our estimate sits closer to CA$156.99, which suggests less room for error if growth or margins fall short.

For readers who lean on cash flow based work, it can be helpful to see how the model is built and what would need to change for CA$156.99 to move closer to the current CA$177.78 price. Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Canadian National Railway for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 11 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

With Canadian National Railway showing both risks and reasons for optimism, it may be useful to review the numbers for yourself. To see both sides of the story in one place, review the 5 key rewards and 1 important warning sign

Looking for more investment ideas beyond Canadian National Railway?

If Canadian National Railway has sharpened your thinking, do not stop here. Use the Simply Wall Street Screener to spot other opportunities before they move without you.

• Target income potential by reviewing established companies that feature 5 dividend fortresses and may appeal if you want yield alongside business stability.
• Hunt for quality at a reasonable price by scanning screener containing 8 high quality undiscovered gems that the wider market might not be watching yet.
• Prioritise capital preservation by focusing on 7 resilient stocks with low risk scores that score well on fundamental strength and volatility control.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com