What's in Store for Canadian Pacific (CP) in Q2 Earnings?

Canadian Pacific Railway Limited CP is scheduled to report second-quarter 2020 results on Jul 22, before market open.

The Zacks Consensus Estimate for second-quarter 2020 earnings has been revised upward by 11.1% to $2.71 in the past 60 days. The company has an impressive earnings history, having outperformed the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of 4.9%, on average.

Let’s discuss the factors that are likely to get reflected in the company’s performance in the quarter to be reported.

The company’s second-quarter top-line is likely to have benefited from impressive freight revenues and low costs.  Also, the record Canadian grain movement in the June quarter is likely to have boosted the top-line performance.

Consistent improvement in operating ratio (operating expenses as a percentage of revenues) is expected to have driven the bottom line in the quarter to be reported. Notably, lower value of this key metric bodes well. However, supply-chain disruptions due to the coronavirus pandemic are likely to have affected the company’s second-quarter performance.

Canadian Pacific Railway Limited Price and EPS Surprise

Canadian Pacific Railway Limited Price and EPS Surprise

Canadian Pacific Railway Limited price-eps-surprise | Canadian Pacific Railway Limited Quote

Although the impact from coronavirus was limited on volumes in the first quarter of 2020, the adversities with respect to volumes are expected to rise in the second quarter and thereafter. Notably, crude volumes are  expected to have declined in the to-be-reported quarter.

What Does the Zacks Model Say?

Our proven model predicts an earnings beat for Canadian Pacific this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of a positive surprise as elaborated below. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: Canadian Pacific has an Earnings ESP of +1.27% as the Most Accurate Estimate is pegged at $2.74 per share, higher than the Zacks Consensus Estimate of $2.71. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Canadian Pacific sports a Zacks Rank #1, currently.

Highlights of Q1 Earnings

Canadian Pacific's first-quarter 2020 earnings (excluding $1.08 from non-recurring items) of $3.3 (C$4.42) per share surpassed the Zacks Consensus Estimate of $2.86. Quarterly earnings also improved more than 55% year over year, primarily owing to low operating expenses. Quarterly revenues of $1,523.3 million (C$2,043) surpassed the Zacks Consensus Estimate of $1,412.3 million. The top line also increased in double digits year over year owing to rise in freight revenues.

Other Stocks to Consider

Investors interested in the broader Transportation sector may also check out other stocks worth considering like United Airlines Holdings, Inc. UAL, Southwest Airlines Co. LUV and Air Lease Corporation AL as these also possess the perfect combination to beat on estimates.

United Airlines has an Earnings ESP of +21.37% and a Zacks Rank #3, currently. The company will release second-quarter 2020 results on Jul 21.

Southwest Airlines presently has an Earnings ESP of +14.34% and is a Zacks #3 Ranked player. The company will release second-quarter 2020 results on Jul 23.

Air Lease has an Earnings ESP of +23.32% and is Zacks #3 Ranked at present. The company will release second-quarter 2020 results on Aug 6.

Biggest Tech Breakthrough in a Generation

Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.

A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.

See 8 breakthrough stocks now>>

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
Southwest Airlines Co. (LUV): Free Stock Analysis Report
United Airlines Holdings Inc (UAL): Free Stock Analysis Report
Canadian Pacific Railway Limited (CP): Free Stock Analysis Report
Air Lease Corporation (AL): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research

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

More Related Articles

Info icon

This data feed is not available at this time.

Sign up for Smart Investing to get the latest news, strategies and tips to help you invest smarter.