Canadian Pacific Q3 & 2018 View Upbeat, Goals Set for '18-'20

Shutterstock photo

Canadian Pacific Railway Limited CP has provided an update on its upcoming third-quarter financial results (to be released on Oct 18) and full-year outlook. Simultaneously, it has outlined a few of its financial objectives for the period 2018-2020.

Bullish Q3 View

Third-quarter revenues are anticipated to register an all-time high figure of $1.9 billion, reflecting a 19% increase. Third-quarter 2017 revenues were $1.6 billion. Additionally, adjusted earnings per share are estimated to be approximately $4.10, also a record high. The comparable figure in the year-ago quarter was $2.90. The Zacks Consensus Estimate for third-quarter earnings stands at $2.81 per share. Meanwhile, the company expects the operating ratio (operating expenses as a percentage of revenues) to be sub-58.5%. The metric was 56.7% during the third quarter of 2017.

2018 EPS Guidance Up

Canadian Pacific has raised its forecast for full-year earnings per share in anticipation of a strong third-quarter as well as a solid outlook for the remainder of the year. The company predicts adjusted earnings per share to rise more than 20% in the year from the previously projected improvement in low-double digits. Adjusted earnings per share were $11.39 last year. During the fourth quarter of 2018, the company expects nearly $50 million in gains from land sales.

Canadian Pacific Railway Limited Price

Canadian Pacific Railway Limited Price | Canadian Pacific Railway Limited Quote

Targets for 2018-2020 Period

The company aims to achieve a double-digit compound annual growth rate (CAGR) in adjusted earnings per share while volumes, measured in Revenue Ton-Miles, are targeted to expand at a CAGR of mid-single digits. Additionally, capital expenditures are targeted to be approximately $1.6 billion during each year of the given period. The goal for the period has been set based on certain assumptions including an annualized effective tax rate of around 25% (excluding gains from foreign-exchange or losses on U.S. dollar-denominated debt and effects of tax rate changes).

Zacks Rank & Other Key Picks

Canadian Pacific carries a Zacks Rank #2 (Buy). Other top-ranked stocks in the broader Transportation sector include Trinity Industries, Inc. TRN , CSX Corporation CSX and Union Pacific Corporation UNP . While Trinity sports a Zacks Rank #1 (Strong Buy), CSX and Union Pacific hold a Zacks Rank of 2.  You can see the complete list of today's Zacks #1 Rank stocks here .

Shares of Trinity, CSX and Union Pacific have rallied more than 13%, 41% and 43%, respectively, in a year.

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.

See the pot trades we're targeting>>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Trinity Industries, Inc. (TRN): Free Stock Analysis Report

Canadian Pacific Railway Limited (CP): Free Stock Analysis Report

Union Pacific Corporation (UNP): Free Stock Analysis Report

CSX Corporation (CSX): Free Stock Analysis Report

To read this article on Zacks.com click here.

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

This article appears in: Investing , Business , Stocks
Referenced Symbols: TRN , CP , UNP , CSX

More from Zacks.com




Equity Research

Research Brokers before you trade

Want to trade FX?