Canadian Pacific Earnings Move Up - Analyst Blog

By
A A A

Canadian Pacific Railway Limited ( CP ), Canada's second largest railway, reported adjusted earnings per share of C$1.24 (approximately $1.23) in the first quarter, surpassing the Zacks Consensus Estimate of $1.18. Adjusted earnings shot up 51.2% from C$0.82 per share (approximately $0.81) in the year-ago quarter.

Quarterly revenues climbed 8.7% year over year to C$1,495 million (approximately $1,484 billion) and surpassed the Zacks Consensus Estimate of $1,464 on volume expansion and strong pricing. The demand for rail service remained healthy across all business segments throughout the quarter.

Carloads (volume) remained flat at 659,000 units, while revenue ton-miles (RTMs), which measure the relative weight and distance of rail freight transported by Canadian Pacific rose 10% year over year.  

Operating income improved 32% year over year to C$362 million (approximately $359 million). Operating expenses increased 3% year over year to C$1,133 million (approximately $1,124 million). Operating ratio (defined as operating expenses as a percentage of revenue) improved 430 basis points year over year to 75.8% because of continued focus on maintaining asset efficiencies, safety measures and increased productivity.

Liquidity

Canadian Pacific exited the first quarter with cash and cash equivalents of C$347 million (approximately $344.4 million), up from C$77 million (approximately $76 million) in the year-ago quarter. Long-term debt was reduced to C$4.590 billion (approximately $4,555 million) from C$4.636 billion (approximately $4.638 billion) in the year-end 2012.  

Our Analysis

We expect Canadian Pacific to deliver strong earnings growth aided by improved volume and pricing. The company is expected to benefit from its coal agreement with Teck Resources Limited ( TCK ) and draw synergies from its agreements with Canpotex and Canadian Tire. Further, major commodities will also garner favorable results for the company. Additionally, Canadian Pacific's improving balance sheet position and regular returns to shareholders in the form of dividends make it attractive for investors.

Canadian Pacific operates with the likes of Canadian National Railway Company ( CNI ) and Union Pacific Corporation ( UNP ) and has a Zacks Rank #2 (Buy rating).



CDN NATL RY CO (CNI): Free Stock Analysis Report

CDN PAC RLWY (CP): Free Stock Analysis Report

TECK RESOURCES (TCK): Free Stock Analysis Report

UNION PAC CORP (UNP): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research




The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: CNI , CP , TCK , UNP

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

Stocks

Referenced

Most Active by Volume

33,110,376
  • $113.99 ▲ 1.77%
25,034,179
    $17.98 unch
24,486,872
  • $7.41 ▲ 2.07%
20,864,535
  • $7.39 ▼ 2.76%
18,600,501
  • $8.30 ▼ 0.36%
17,530,211
  • $8.14 ▲ 3.17%
17,299,208
  • $93.79 ▲ 2.74%
14,669,760
  • $25.78 ▼ 0.19%
As of 12/26/2014, 04:15 PM


Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com