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Canadian Pacific (CP) Beats Q3 Earnings, Misses Revenues

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Canada's leading railway operator, Canadian Pacific Railway LimitedCP , reported earnings per share of C$2.04 ($1.56) in the third quarter of 2015 compared with C$2.31 ($1.77) recorded in the year-ago quarter. However, adjusted earnings per share of C$2.69 ($2.05) outpaced the Zacks Consensus Estimate of $2.03.

Quarterly revenues climbed 2.3% year over year to C$1,709 million ($1,308.1 million) but fell below the Zacks Consensus Estimate of $1,318 million. The demand for rail services was healthy across most business segments in the quarter under review which translated into the year-over-year upside in revenues. In the third quarter, carloads (volume) decreased 3% year over year and revenue ton-miles also fell 4% year over year.

Operating income witnessed a record improvement of 21.3% year over year to C$753 million ($576.3 million). Meanwhile, operating expenses fell 8.9% year over year. Operating ratio (defined as operating expenses as a percentage of revenues) improved a whopping 290 basis points year over year to 59.9% on continued focus on asset efficiency, safety measures and productivity improvement.

Liquidity

Canadian Pacific exited the third quarter with cash and cash equivalents of C$661 million ($505.9 million) compared with C$226 million ($173 million) at the end of fiscal 2014. Long-term debt totaled C$8,648 million compared with C$6,619.2 million at end-2014.

Zacks Rank & Key Picks

Currently, Canadian Pacific has a Zacks Rank #3 (Hold). Better-ranked transportation stocks include American Airlines Group Inc. AAL , Alaska Air Group, Inc. ALK and JetBlue Airways Corp. JBLU . All three companies carry a Zacks Rank #2 (Buy).

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


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

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