Canadian Pacific Railway Limited
), Canada's second largest railway, reported adjusted earnings
per share of C$1.43 (approximately $1.39) in the second quarter,
missing the Zacks Consensus Estimate of $1.45. Adjusted earnings
improved a staggering 138% from 60 Canadian cents per share
(approximately 59 cents) in the year-ago quarter.
Quarterly revenues climbed 10% year over year to C$1,497
million (approximately $1,463 billion) but fell short of the
Zacks Consensus Estimate of $1,476. The demand for rail service
remained healthy across most of the business segments resulting
in year-over-year growth.
Carloads (volume) increased 3% year over year, while revenue
ton-miles (RTMs), which measure the relative weight and distance
of rail freight transported by Canadian Pacific, grew 11% year
Operating income improved 76% year over year to C$420 million
(approximately $410.1 million). Operating expenses increased 4%
year over year to C$1,077 million (approximately $1,053 million).
Operating ratio (defined as operating expenses as a percentage of
revenue) improved 1,060 basis points year over year to 71.9% on
continued focus on maintaining asset efficiencies, safety
measures and productivity increase.
Canadian Pacific exited the second quarter with cash and cash
equivalents of C$442 million (approximately $432 million), up
from C$82 million (approximately $81 million) in the year-ago
quarter. Long-term debt increased to C$4.677 billion
(approximately $4.849 billion) from C$4.636 billion
(approximately $4.591 billion) in the year-end 2012.
For 2013, the company expects revenue growth in the
high-single digit range. Operating ratio is expected in the low
70s and earnings per share growth is expected to be over 40%
compared to th year-ago level.
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
) and draw synergies from its agreements with Canpotexand
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
Canadian Pacific operates with the likes of
Canadian National Railway Company
Union Pacific Corporation
) and has a Zacks Rank #3 (Hold).
CDN NATL RY CO (CNI): Free Stock Analysis
CDN PAC RLWY (CP): Free Stock Analysis Report
TECK RESOURCES (TCK): Free Stock Analysis
UNION PAC CORP (UNP): Free Stock Analysis
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