Canadian Pacific Kansas City (CP) AI Stock Analysis

• Market Cap: $96.41B
• Dividend Yield: 0.75%
• Average Volume (3M): 1.99M
• Price to Earnings (P/E): 26.0
• Beta (1Y): 0.72
• Revenue Growth: 15.86%
• EPS Growth: -5.49%
• Country: CA
• Employees: 19,797
• Sector: Industrials
• Sector Strength: 61
• Industry: Railroads
• EPS (TTM): 3.98
• Shares Outstanding: 933,713,500
• 10 Day Avg. Volume: 2,202,688
• 30 Day Avg. Volume: 1,993,228
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 6.62
• Price to Cash Flow (P/CF): 14.10
• P/FCF Ratio: 16.50
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: C$127.61
• Price Target Upside: 23.59% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 20

Canadian Pacific Kansas City's strong financial performance and positive earnings outlook are the primary factors driving a favorable stock evaluation. The stock's current technical position suggests caution, and the moderate valuation indicates limited immediate upside. Positive corporate events support a long-term growth strategy.

Positive Factors

Asset Sale

The sale of the Panama Canal Railway Company is seen as beneficial, as it was a non-core asset and the proceeds may support share buybacks or leverage ratio improvements.

Network Expansion

The combination of CP Rail and Kansas City Southern networks significantly expands the addressable freight market for the merged entity.

Tariffs

The tariff announcement maintains current USMCA exemptions, which is considered better than feared and reduces uncertainty for CPKC shares.

Negative Factors

Currency Impact

Currency impacts are pressuring US dollar results, leading to a lowered price objective.

Volume Targets

Volumes are trending below targets in multiple areas including Intermodal, Grain, Energy, Chemicals & Plastics, and Forest Products.

Weather Impact

Severe winter weather has impacted volumes and added margin pressure due to increased costs.

Canadian Pacific Kansas City Business Overview & Revenue Model

Company Description

Canadian Pacific Railway Limited, together with its subsidiaries, owns and operates a transcontinental freight railway in Canada and the United States. The company transports bulk commodities, including grain, coal, potash, fertilizers, and sulphur; and merchandise freight, such as energy, chemicals and plastics, metals, minerals and consumer, automotive, and forest products. It also transports intermodal traffic comprising retail goods in overseas containers. The company offers rail and intermodal transportation services through a network of approximately 13,000 miles serving business centers in Quebec and British Columbia, Canada; and the United States Northeast and Midwest regions. Canadian Pacific Railway Limited was incorporated in 1881 and is headquartered in Calgary, Canada.

How the Company Makes Money

Canadian 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.

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.

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.

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

• Technical Analysis Sentiment: Neutral
• Last Price: 103.25
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:CP, the sentiment is Neutral. The current price of 103.25 is above the 20-day moving average (MA) of 102.86, below the 50-day MA of 107.48, and below the 200-day MA of 108.97, indicating a neutral trend. The MACD of -2.17 indicates Positive momentum. The RSI at 38.50 is Neutral, neither overbought nor oversold. The STOCH value of 16.55 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for TSE:CP.

Canadian Pacific Kansas City Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FTT	77 Outperform	C$5.19B	10.65	19.79%	3.02%	6.45%	2.60%
CP	76 Outperform	$96.41B	25.95	8.36%	0.75%	15.86%	-5.49%
WTE	75 Outperform	C$1.48B	12.87	15.84%	6.59%	7.98%	-0.29%
Sector *	62 Neutral	$7.68B	13.06	3.21%	3.34%	3.61%	-14.41%

Canadian Pacific Kansas City Corporate Events

CPKC Sells Panama Canal Railway to APM Terminals

Canadian Pacific Kansas City (CPKC) and Lanco Group/Mi-Jack have sold the Panama Canal Railway Company (PCRC) to APM Terminals, a division of A.P. Moller – Maersk. This sale aligns with CPKC’s strategy to optimize its assets and focus on its core North American rail business. The transaction is expected to create value for shareholders and enhance APM Terminals’ service offerings in the region, leveraging PCRC’s operational excellence to expand intermodal container movement services.

CPKC Announces $1.2 Billion Debt Offering to Strengthen Financial Position

Canadian Pacific Kansas City Limited announced a US $1.2 billion debt offering through its subsidiary, Canadian Pacific Railway Company. The proceeds from this offering, which includes $600 million of 4.800% Notes due 2030 and $600 million of 5.200% Notes due 2035, will be used mainly for refinancing existing debt and general corporate purposes. This financial move is expected to strengthen CPKC’s financial position and provide flexibility for future operations.

Canadian Pacific Kansas City Reports Strong Q4 Results and Optimistic Outlook for 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.

Canadian Pacific Kansas City Declares Quarterly Dividend

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.