Canadian Pacific Railway Limited
), Canada's second largest railway carrier, reported adjusted
earnings per share of C$1.88 (approximately $1.82) in the third
quarter of 2013, beating the Zacks Consensus Estimate of $1.68.
The results improved 45% from C$1.30 per share (approximately
$1.31) in the year-ago quarter. Shareholders reacted positively
to the news as the stock gained 9.19% in Wednesday trade on
Quarterly revenues climbed 5.7% year over year to C$1,534
million (approximately $1,476 billion) but fell short of the
Zacks Consensus Estimate of $1,499. The demand for rail service
remained healthy across most of the business segments resulting
in year-over-year growth.
Carloads (volume) decreased 2% year over year, while revenue
ton-miles (RTMs), which measure the relative weight and distance
of rail freight transported by Canadian Pacific, grew 2% year
Operating income improved 39.4% year over year to C$524
million (approximately $504.2 million). Operating expenses
increased 6% year over year to C$1,010 million (approximately
$972 million). Operating ratio (defined as operating expenses as
a percentage of revenues) improved 820 basis points year over
year to 65.8% on continued focus on maintaining asset
efficiencies, safety measures and productivity increase.
Canadian Pacific exited the third quarter with cash and cash
equivalents of C$329 million (approximately $316.6 million), down
from C$333 million (approximately $336 million) at the end of
2012. Long-term debt decreased to C$4.591 billion (approximately
$4.418 billion) from C$4.636 billion (approximately $4.681
billion) at year-end 2012.
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 Ltd
) and draw synergies from its agreements with Canpotex and
Canadian Tire. Further, focus on volume expansion, operational
efficiency, pricing revision and network capability upgrade bode
well for the company.
However, a weak coal business, commodity risks related to
purchase of diesel fuel and competition from other Canadian and
U.S. companies are headwinds to the company's performance.
Canadian Pacific operates with the likes of
Canadian National Railway Company
Union Pacific Corp.
) and has a Zacks Rank #3 (Hold).
CDN NATL RY CO (CNI): Free Stock Analysis
CDN PAC RLWY (CP): Free Stock Analysis Report
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UNION PAC CORP (UNP): Free Stock Analysis
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