Canadian National Railway (TSX:CNR) recently bounced on first-quarter (Q1) 2025 earnings results, but the share price is still down 20% over the past year. Contrarian investors are wondering if CNR stock is now oversold and good to buy for a self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) focused on total returns.
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Canadian National Railway stock
CN trades near $139 per share at the time of writing compared to $132 last week, but it is still way off the $180 it reached in March last year.
The steady decline in the share price is due to a number of external shocks, along with some internal disruptions. Wildfires in Alberta last summer and strikes at ports delayed shipments on CN’s rail network and forced some customers to divert business to ports in the United States. CN also had to contend with a rail strike that lasted about a week in August.
In 2025, the story has been about the uncertainty surrounding tariffs and trade negotiations between the United States and its neighbours, as well as with China. CN’s rail network comprises roughly 20,000 route miles that connect ports on the Pacific and Atlantic coasts in Canada to the Gulf Coast in the United States. The company moves cargo ranging from coal, crude oil, chemicals and cars to forestry products, fertilizer, and finished goods.
Investors are concerned that tariffs implemented by the United States and its trade partners will cause a recession in the U.S. and Canada. This would reduce demand for the commodities and finished goods transported along CN’s network.
CN earnings
CN recently reported solid Q1 2025 results despite the impact of difficult winter conditions and the tariff threats. Revenue increased by $154 million to $4.4 billion in the quarter compared to the same period last year. Operating revenue rose 4% to $1.61 billion. Diluted earnings per share (EPS) increased 8% to $1.85.
Coal, petroleum, and chemicals, and grain and fertilizers were the segments that delivered revenue growth. Automotive, intermodal, forestry products, and metals and minerals saw revenues that declined on a constant currency comparison.
CN maintained its positive guidance for the year. The railway expects to deliver growth in adjusted diluted EPS of 10% to 15% compared to 2024. Capital investments are set at $3.4 billion. For the 2024 to 2026 timeframe, management sees compound annual adjusted diluted EPS growth in the high single digits.
The Q1 report did, however, acknowledge recession risks connected to tariffs and trade disputes.
Dividends and share buybacks
Earlier in the year, CN announced a 5% dividend increase, marking the 25th consecutive annual dividend hike for investors. CN is also using excess cash to take advantage of the lower share price to buy back up to 20 million shares over a 12-month period under the new Normal Course Issuer Bid (NCIB).
Investors who buy CNR stock at the current level can get a dividend yield of 2.55%.
Time to buy CN stock?
Near-term volatility should be expected due to the uncertainty around the outcome of the trade negotiations between the United States and its key trading partners. That being said, CN continues to deliver steady results, and much of the potential bad news might already be priced into the stock. If you have some cash to put to work, CN deserves to be on your radar for a buy-and-hold portfolio.
