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Canadian Pacific Kansas City (TSE:CP)
TSX:CP
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Canadian Pacific Kansas City
(TSX:CP)77Outperform
Positive Factors
Earnings Growth
The company is targeting EPS growth of 12-18% as CP continues to execute on company-specific growth initiatives above and beyond underlying macro conditions.
Financial Performance
CP reported 4Q24 results that were above expectations despite choppy operating conditions across Canada as the company continues to execute on idiosyncratic synergy opportunities and efficiencies.
Negative Factors
Stock Performance
CP's stock has been flat and underperformed compared to other rails and the S&P 500 since its acquisition of KSU.
Canadian Pacific Kansas City (CP) vs. S&P 500 (SPY)
Market Cap
$105.22B
Dividend Yield0.73%
Average Volume (3M)1.51M
Price to Earnings (P/E)28.3
Beta (1Y)0.84
Revenue Growth15.86%
EPS Growth-5.49%
CountryCA
Employees20,256
SectorIndustrials
Sector Strength66
IndustryTransportation
Share Statistics
EPS (TTM)3.98
Shares Outstanding933,713,500
10 Day Avg. Volume1,384,196
30 Day Avg. Volume1,510,522
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)7.28
Price to Cash Flow (P/CF)20.70
P/FCF Ratio39.80
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$130.34Price Target Upside21.26% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering19
Canadian Pacific Kansas City Business Overview & Revenue Model
Company DescriptionFounded in 1881, Canadian Pacific Railway Ltd. provides rail services in Canada and the United States. It offers rail and intermodal transportation services and also transports bulk commodities, merchandise freight, and intermodal traffic.
How the Company Makes MoneyCanadian Pacific Kansas City makes money through its rail transportation services, which are the backbone of its revenue model. The company generates revenue by charging fees for transporting freight across its rail network. Key revenue streams include hauling bulk commodities like grain, coal, and minerals, as well as intermodal transportation, which involves moving shipping containers that can be transferred between different modes of transportation. Additionally, the company benefits from contracts and partnerships with major industrial clients and logistic companies, which provide consistent business and optimize network efficiency. These partnerships often involve long-term agreements that ensure steady revenue inflow. Factors such as fuel surcharges, network efficiency, and operational cost management also significantly impact the company's earnings.
Canadian Pacific Kansas City Financial Statement Overview
Summary
Canadian Pacific Kansas City exhibits a strong financial performance with robust revenue growth and profitability. The balanced debt levels and solid equity base reduce financial risk, although there is potential to enhance shareholder returns. Cash flow generation is improving, further strengthening the company's financial position.Income Statement
Canadian Pacific Kansas City showed a strong revenue growth rate of 15.87% from 2023 to 2024, indicating robust top-line performance. The gross profit margin for 2024 was 35.60%, and the net profit margin was 25.56%, reflecting good profitability. The EBIT margin was also high at 35.60%, while the EBITDA margin stood at 51.37%. These figures suggest efficient operational management and strong profitability across the board.85
Very Positive
Balance Sheet
The debt-to-equity ratio for 2024 was 0.48, indicating a balanced approach to leveraging debt. The return on equity (ROE) was 7.76%, which, while positive, suggests room for improvement in terms of generating returns for shareholders. The equity ratio was 54.56%, highlighting a solid equity base relative to total assets, reducing financial risk.78
Positive
Cash Flow
Operating cash flow in 2024 was healthy at $5.27 billion, supporting a free cash flow to net income ratio of 0.65. The free cash flow growth rate was 46.82%, showcasing significant improvement in cash generation capabilities. The operating cash flow to net income ratio of 1.42 indicates strong cash conversion from earnings.80
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 14.55B | 12.55B | 8.81B | 8.00B | 7.71B | Gross Profit |
| 5.18B | 6.38B | 4.59B | 4.42B | 4.36B | EBIT |
| 5.18B | 4.39B | 4.80B | 3.21B | 3.31B | EBITDA |
| 7.47B | -731.00M | 4.58B | 4.85B | 4.44B | Net Income Common Stockholders |
| 3.72B | 3.93B | 3.52B | 2.85B | 2.44B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 739.00M | 464.00M | 451.00M | 69.00M | 147.00M | Total Assets |
| 87.74B | 80.39B | 73.50B | 68.18B | 23.64B | Total Debt |
| 22.99B | 22.84B | 19.65B | 20.13B | 9.77B | Net Debt |
| 22.25B | 22.37B | 19.20B | 20.06B | 9.62B | Total Liabilities |
| 38.85B | 37.98B | 34.61B | 34.35B | 16.32B | Stockholders Equity |
| 47.89B | 41.49B | 38.89B | 33.83B | 7.32B |
| Cash Flow | Free Cash Flow | |||
| 2.41B | 1.64B | 2.58B | 2.16B | 1.13B | Operating Cash Flow |
| 5.27B | 4.14B | 4.14B | 3.69B | 2.80B | Investing Cash Flow |
| -2.80B | -2.16B | -1.50B | -13.73B | -2.03B | Financing Cash Flow |
| -2.25B | -1.96B | -2.30B | 9.94B | -764.00M |
Canadian Pacific Kansas City Technical Analysis
Negative
107.49
Price Trends
109.71
Negative
108.59
Negative
109.48
Negative
Market Momentum
-0.19
Positive
41.91
Neutral
45.48
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:CP, the sentiment is Negative. The current price of 107.49 is below the 20-day moving average (MA) of 110.82, below the 50-day MA of 109.71, and below the 200-day MA of 109.48, indicating a bearish trend. The MACD of -0.19 indicates Positive momentum. The RSI at 41.91 is Neutral, neither overbought nor oversold. The STOCH value of 45.48 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:CP.
Canadian Pacific Kansas City Risk Analysis
Canadian Pacific Kansas City disclosed 25 risk factors in its most recent earnings report. Canadian Pacific Kansas City reported the most risks in the “Legal & Regulatory” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Canadian Pacific Kansas City Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
82 Outperform | C$5.79B | 11.78 | 19.36% | 2.63% | 6.45% | 2.60% | |
77 Outperform | $105.22B | 28.33 | 7.76% | 0.73% | 15.86% | -5.49% | |
74 Outperform | C$1.51B | 14.37 | 15.02% | 6.12% | 12.35% | 11.77% | |
62 Neutral | $8.11B | 13.34 | 1.17% | 3.02% | 4.16% | -15.14% |
* Industrials Sector Average
Performance Comparison
TSE:CP
Canadian Pacific Kansas City
107.49
-10.16
-8.63%
CNI
Canadian National Railway
97.47
-27.49
-22.00%
TFII
TFI International
81.88
-66.90
-44.97%
TSE:FTT
Finning International
41.12
6.87
20.06%
TSE:WTE
Westshore Terminals
23.90
0.49
2.09%
NPIFF
Northland Power
13.18
-2.87
-17.88%
Canadian Pacific Kansas City Earnings Call Summary
Earnings Call Date: Jan 29, 2025 | % Change Since: -5.41% | Next Earnings Date: Apr 23, 2025
Earnings Call Sentiment Positive
CPKC's earnings call highlighted strong revenue growth, operational improvements, and significant achievements in the automotive sector. Despite facing challenges in certain segments and dealing with inflationary pressures, the company's outlook remains positive with expectations for continued growth in 2025.Highlights
Record Revenue and Volume Growth
CPKC delivered revenues of $3.9 billion in Q4, up 3%, with volume growth of 2%. For the full year, total revenues reached $14.5 billion, up 5%, with volume growth of 3%.
Significant EPS Increase
Core EPS increased by 9% in Q4 and 11% for the full year, reaching $1.29 and $4.25 respectively.
Operational Efficiency Improvements
Operating ratio improved by 160 basis points to 57.1 in Q4 and by 70 basis points to 61.3 for the full year. Train weight and length improved by 4%, with fuel efficiency increasing by 2%.
Safety Achievements
CPKC led the industry with the lowest train accident frequency among the Class 1s for the second year in a row, with a 5% improvement in train accident frequency.
Automotive Sector Recognition
CPKC was named GM Supplier of the Year for finished vehicles in 2024, marking a significant achievement in the automotive sector.
Lowlights
Challenges in Potash and Coal Segments
Potash revenues were down 4% with a 7% volume decline, and coal revenue decreased by 3% on an 8% decline in volume.
Intermodal Revenue Decline
Intermodal revenue was down 6% despite a 1% volume growth, impacted by labor disruption at the Port of Vancouver.
Inflationary Pressures
Although inflation has moderated, CPKC is still dealing with inflationary pressures, particularly in labor and materials costs.
Company Guidance
During the CPKC's Fourth Quarter and Full Year 2024 Conference Call, the company provided a comprehensive overview of its financial performance and strategic outlook. For the fourth quarter, CPKC reported revenues of $3.9 billion, marking a 3% increase, with volume growth of 2% and an improved operating ratio of 57.1, a 160 basis point enhancement. Core EPS for the quarter rose by 9% to $1.29. For the full year, total revenues reached $14.5 billion, up 5%, and volume growth was at 3%. The operating ratio improved by 70 basis points to 61.3, and core EPS increased by 11% to $4.25. Looking ahead to 2025, CPKC projects mid-single-digit volume growth and earnings growth between 12% and 18%, aligned with its multi-year guidance. The company highlighted several strategic initiatives and investments, including the completion of the second span of the Laredo Bridge, contributing to efficient operations and growth potential. The automotive sector showed robust performance, with CPKC being named GM Supplier of the Year for finished vehicles in 2024, a significant accolade among 20,000 suppliers. The company remains focused on leveraging its unique network to drive growth, emphasizing the integration and synergies from its merger, particularly in bulk, automotive, and intermodal segments.Canadian Pacific Kansas City Corporate Events
Business Operations and StrategyFinancial Disclosures
Canadian Pacific Kansas City Reports Strong Q4 Results and Optimistic Outlook for 2025
Positive
Jan 29, 2025
Canadian Pacific Kansas City (CPKC) reported strong fourth-quarter results for 2024, with revenues reaching $3.9 billion, a 3% increase from the previous year. The company achieved a significant improvement in its operating ratio and safety performance, with reduced personal injury and train accident frequencies. CPKC’s leadership in the industry is marked by its lowest train accident frequency among Class 1 railroads for the second consecutive year. Looking forward to 2025, CPKC anticipates continued earnings growth, driven by a focus on safety and operational excellence, aligning with its multi-year growth strategy.
Dividends
Canadian Pacific Kansas City Declares Quarterly Dividend
Positive
Jan 29, 2025
Canadian Pacific Kansas City Limited announced a quarterly dividend of $0.19 per share on its outstanding common shares, payable on April 28, 2025, to shareholders of record as of March 28, 2025. This declaration underscores CPKC’s commitment to providing shareholder value and reflects its robust financial health. The dividend is classified as an ‘eligible’ dividend under Canadian tax legislation, which may have positive tax implications for shareholders.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.