Canadian Pacific Misses On Revenue In 1Q

Canadian Pacific reported its first-quarter financial results on April 21 after market close. The transcontinental railway profit increased strongly in the quarter while revenue fell slightly.

Canadian Pacific’s (CP) revenue came in at C$1.96 billion in the first quarter of 2021, a decrease of 3.9% from C$2.04 billion last year. Revenue missed analysts estimate by C$20 million.

Meanwhile, diluted EPS was C$4.50 in 1Q 2021, an increase of 51% from C$2.98 in 1Q 2020. On an adjusted basis, CP earned C$4.48 per share for the quarter, up 1% from C$4.42 last year. This is in line with what analysts expected.

The operating ratio deteriorated to 60.2% in the first quarter, from 59.2% last year. (See Canadian Pacific stock analysis on TipRanks)

Canadian Pacific’s President and CEO Keith Creel said, “The strong demand environment, particularly across bulk, merchandise, and domestic intermodal, coupled with our commitment to the foundations of precision scheduled railroading enabled our success in the first quarter. The CP family demonstrated resiliency through winter and delivered a record March. Our 12,000-strong team continues to deliver, no matter the obstacles, and I am extremely proud of their efforts.”

“The momentum we ended the first quarter with has enabled a strong start to the second quarter and we remain committed to delivering for our customers, employees, shareholders and communities. We are excited about the unique opportunities ahead in 2021 and the strong base demand environment,” added Creel.

For full-year 2021, Canadian Pacific expects adjusted EPS to grow in double-digits from C$17.67 in 2020.

A week ago, Barclays analyst Brandon Oglenski upgraded the stock from Hold to Buy, with a C$550.00 price target (21.5% upside potential) based on the long-term potential of the pending acquisition of Kansas City Southern.

Overall, the consensus on the Street is that CP is a Strong Buy based on 14 Buys and 3 Holds. The average analyst price target of C$521.17 implies an upside potential of about 15% to current levels. Shares have jumped by more than 40% over one year.