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Canadian Pacific Railway (CP) Takes Over Steelcare

Canadian Pacific Railway LimitedCP recently bought Canada's leading steel transload facility - Steelcare Inc. The deal also includes TransCare Logistics Corporation, Prometheus Six Inc. and East Port Warehousing & Distribution. However, financial terms of the transaction were not revealed.

Steelcare provides high quality transloading, warehousing and distribution services of steel products. Moreover, the company has the infrastructure to manage up to 1.5 million tons of rail transload products every year. Thus, the acquisition of Steelcare will certainly help Canadian Pacific boost its top line by nearly $10 million.

Meanwhile a few days back, Canadian Pacific Railway closed the sale of its subsidiary Delaware & Hudson Railway Co.'s ("D&H") tracks between Sunbury, PA, and Schenectady, NY, to Norfolk Southern Corp. NSC for $214.5 million. The deal also included D&H's car shop in Binghamton.

Canadian Pacific exited the second quarter of 2015 with cash and cash equivalents of C$185 million. Thus, we believe that the sale of D&H tracks coupled with the recent tender offer of $1.2 billion debts will encourage railroad operators to forge ahead with their acquisition goals. Moreover, it will also help the company to enhance shareholders' wealth through raised dividend payouts.

Meanwhile, Canadian Pacific is set to release third-quarter 2015 financial numbers before the opening bell on Oct 20.

Zacks Rank & Key Picks

Canadian Pacific carries a Zacks Rank #4 (Sell). Better-ranked stocks in this sector include Dakota Plains Holdings, Inc. DAKP and United Parcel Service, Inc. UPS , both of which carry a Zacks Rank #2 (Buy).

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UTD PARCEL SRVC (UPS): Free Stock Analysis Report

NORFOLK SOUTHRN (NSC): Free Stock Analysis Report

CDN PAC RLWY (CP): Free Stock Analysis Report

DAKOTA PLNS HLD (DAKP): Free Stock Analysis Report

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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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