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Canadian Pacific Kansas City (TSE:CP)
TSX:CP
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Canadian Pacific Kansas City (CP) AI Stock Analysis

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TSE:CP

Canadian Pacific Kansas City

(TSX:CP)

Rating:75Outperform
Price Target:
C$118.00
▲(12.26% Upside)
Canadian Pacific Kansas City's strong financial performance and positive earnings call insights are key strengths, supporting a solid overall score. However, technical indicators suggest caution, and valuation metrics indicate the stock is fairly priced but not a bargain. System integration challenges and trade policy uncertainties are notable risks.
Positive Factors
Earnings Growth
CP reaffirmed its core adjusted EPS growth target of 10%-14% based on a mid-single digit increase in RTMs.
Market Expansion
The combination of CP Rail and Kansas City Southern networks significantly expands the addressable freight market for the merged entity.
Operational Efficiency
Unique supply chain solutions driving above-average volume growth, combined with best-in-class operational execution, make CPKC one of the most attractive growth stories in Transports.
Negative Factors
Cost Pressures
The negative mix impact from higher coal & international intermodal volumes, fuel headwinds, and the carbon tax cancellation are expected to offset solid core pricing.
Operational Challenges
IT cutover causes slight margin pressure due to operational issues in the southern part of Kansas City Southern’s legacy network.
Revenue Impact
The removal of the carbon tax will still pressure the top line (but benefit expenses).

Canadian Pacific Kansas City (CP) vs. iShares MSCI Canada ETF (EWC)

Canadian Pacific Kansas City Business Overview & Revenue Model

Company DescriptionCanadian Pacific Kansas City Ltd. engages in the provision of rail freight transportation services. It offers rail services linking Canada, the United States and Mexico. The company was founded on June 22, 2001, and is headquartered in Calgary, Canada.
How the Company Makes MoneyCP generates revenue primarily through the transportation of freight across its extensive rail network. The company earns money by charging customers for shipping various goods, which include bulk commodities (like grain and coal), merchandise (such as automobiles and consumer goods), and intermodal containers. Key revenue streams are derived from long-term contracts with large shippers and spot market transactions. Additionally, CP may benefit from strategic partnerships with other transportation and logistics companies that enhance its service offerings and market reach. Economic factors, such as demand for freight services and fuel prices, also play a significant role in influencing the company's earnings.

Canadian Pacific Kansas City Earnings Call Summary

Earnings Call Date:Jul 30, 2025
(Q2-2025)
|
% Change Since: |
Next Earnings Date:Oct 22, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strong volume and revenue growth, successful partnerships, and operational improvements. However, these positives were offset by system integration challenges, pricing and revenue mix issues, and trade policy uncertainties.
Q2-2025 Updates
Positive Updates
Volume and Revenue Growth
The team delivered a volume growth of 7% and revenues were up 3% to $3.7 billion. Earnings per share increased by 7% versus last year to $1.12.
Partnership Developments
Continued ramp-up of the Gemini partnership and a 40% year-over-year increase in the 180/181 premium domestic intermodal service.
Operational Improvements
1% improvement in both train weights and train lengths. Safety improvements noted with an 8% year-over-year improvement in FRA personal injuries.
International Intermodal Growth
International intermodal volumes are up 28% due to strong growth from the Gemini alliance.
Negative Updates
System Integration Challenges
System-wide dwell increased by 7% in the quarter due to integration issues, impacting earnings by $0.03 to $0.04.
Pricing and Revenue Mix Challenges
Pricing results were impacted by lower fuel surcharge, removal of the carbon tax in Canada, and negative business mix.
Trade Policy and Tariff Uncertainties
Increased tariffs on cross-border steel impacted volumes, and there is ongoing uncertainty from macro and trade policies.
Company Guidance
In the second quarter of 2025, CPKC reported a 7% growth in volume and a 3% increase in revenue, reaching $3.7 billion. The operating ratio improved by 110 basis points to 60.7%, and earnings per share increased by 7% to $1.12 compared to the previous year. The company highlighted several strategic initiatives contributing to its performance, including a 40% growth in its 180/181 premium domestic intermodal service and strong volume increases in traffic flows between Canada and Mexico. Safety metrics also showed improvement, with an 8% year-over-year reduction in FRA personal injuries. Looking ahead, CPKC is confident in achieving mid-single-digit volume growth for the year and maintaining its industry-leading performance, despite potential challenges from evolving trade policies and macroeconomic uncertainties.

Canadian Pacific Kansas City Financial Statement Overview

Summary
Canadian Pacific Kansas City demonstrates strong financial health with robust revenue growth and profitability. The balance sheet is well-managed with moderate leverage, and cash flow generation is solid. However, declining gross profit margins and fluctuating free cash flow growth pose some risks.
Income Statement
85
Very Positive
Canadian Pacific Kansas City shows strong revenue growth with a TTM (Trailing-Twelve-Months) growth rate of 64.8%, indicating robust expansion. The company maintains healthy profitability with a gross profit margin of 40.53% and a net profit margin of 28.04%. EBIT and EBITDA margins are also strong at 41.26% and 54.38%, respectively, reflecting efficient operations. However, the gross profit margin has decreased from previous years, suggesting potential cost pressures.
Balance Sheet
78
Positive
The balance sheet is stable with a manageable debt-to-equity ratio of 0.48, indicating prudent leverage. Return on equity stands at 8.97%, showing effective use of equity to generate profits. The equity ratio is solid, reflecting a strong capital structure. However, the return on equity has slightly decreased from previous years, which could indicate challenges in maintaining profitability growth.
Cash Flow
82
Very Positive
Cash flow metrics are positive, with a free cash flow growth rate of 6.2% in the TTM, indicating improved cash generation. The operating cash flow to net income ratio of 1.45 suggests strong cash conversion efficiency. The free cash flow to net income ratio is 0.46, reflecting good cash flow relative to earnings. However, the free cash flow growth has been volatile in past years, which could pose risks.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue14.92B14.55B12.55B8.81B8.00B7.71B
Gross Profit7.18B7.54B6.44B4.59B4.59B4.43B
EBITDA8.11B7.47B-739.00M5.65B4.87B4.44B
Net Income4.18B3.72B3.93B3.52B2.85B2.44B
Balance Sheet
Total Assets85.18B88.40B80.39B73.75B68.35B23.82B
Cash, Cash Equivalents and Short-Term Investments799.00M739.00M464.00M451.00M82.00M147.00M
Total Debt22.27B22.99B22.84B19.92B20.41B10.08B
Total Liabilities38.03B39.51B37.98B34.86B34.52B16.50B
Stockholders Equity46.20B47.89B41.49B38.89B33.83B7.32B
Cash Flow
Free Cash Flow2.50B2.41B1.64B2.58B2.16B1.13B
Operating Cash Flow5.49B5.27B4.14B4.14B3.69B2.80B
Investing Cash Flow-2.49B-2.80B-2.16B-1.50B-13.73B-2.03B
Financing Cash Flow-2.74B-2.25B-1.96B-2.30B9.94B-764.00M

Canadian Pacific Kansas City Technical Analysis

Technical Analysis Sentiment
Negative
Last Price105.11
Price Trends
50DMA
105.97
Negative
100DMA
106.67
Negative
200DMA
106.78
Negative
Market Momentum
MACD
0.15
Negative
RSI
50.99
Neutral
STOCH
75.44
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:CP, the sentiment is Negative. The current price of 105.11 is above the 20-day moving average (MA) of 103.99, below the 50-day MA of 105.97, and below the 200-day MA of 106.78, indicating a neutral trend. The MACD of 0.15 indicates Negative momentum. The RSI at 50.99 is Neutral, neither overbought nor oversold. The STOCH value of 75.44 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:CP.

Canadian Pacific Kansas City Risk Analysis

Canadian Pacific Kansas City disclosed 25 risk factors in its most recent earnings report. Canadian Pacific Kansas City reported the most risks in the "Legal & Regulatory" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 2 New Risks
1.
Climate-Related Risks Q4, 2022
2.
Our business, financial condition, and results of operations have been adversely affected, and in the future, could be adversely affected by pandemics or other public health crises. Q4, 2022

Canadian Pacific Kansas City Peers Comparison

Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
75
Outperform
$97.46B23.669.10%0.76%4.77%20.28%
64
Neutral
$10.75B15.577.24%2.01%2.80%-14.32%
$60.49B18.5721.83%2.63%
$8.02B22.2013.80%1.84%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TSE:CP
Canadian Pacific Kansas City
105.11
-8.37
-7.38%
CNI
Canadian National Railway
95.25
-17.72
-15.69%
TFII
TFI International
95.16
-40.82
-30.02%

Canadian Pacific Kansas City Corporate Events

Business Operations and StrategyFinancial Disclosures
CPKC Reports Strong Q2 2025 Growth and Operational Efficiency
Positive
Jul 30, 2025

Canadian Pacific Kansas City reported strong financial performance in the second quarter of 2025, with revenues reaching $3.7 billion and a notable increase in diluted earnings per share. The company overcame challenges in its southern U.S. network and achieved a seven percent increase in volumes, reflecting its strategic execution and market expansion efforts. CPKC’s improved operating ratio and reduced personal injury frequency highlight its operational efficiency and commitment to safety. The company remains confident in achieving its full-year guidance, driven by opportunities within its extensive North American network.

The most recent analyst rating on (TSE:CP) stock is a Buy with a C$133.00 price target. To see the full list of analyst forecasts on Canadian Pacific Kansas City stock, see the TSE:CP Stock Forecast page.

Dividends
CPKC Declares Quarterly Dividend, Strengthening Shareholder Value
Positive
Jul 30, 2025

Canadian Pacific Kansas City Limited has announced a quarterly dividend of $0.228 per share on its outstanding common shares, payable on October 27, 2025, to shareholders of record as of September 26, 2025. This decision reflects the company’s commitment to providing value to its shareholders and may enhance its attractiveness to investors, potentially impacting its market positioning positively.

The most recent analyst rating on (TSE:CP) stock is a Buy with a C$127.00 price target. To see the full list of analyst forecasts on Canadian Pacific Kansas City stock, see the TSE:CP Stock Forecast page.

Private Placements and FinancingBusiness Operations and Strategy
CPKC Launches C$1.4 Billion Debt Offering to Refinance Debt
Neutral
Jun 12, 2025

Canadian Pacific Kansas City Limited announced a C$1.4 billion debt offering through its subsidiary, Canadian Pacific Railway Company. The proceeds from this offering, which includes notes due in 2032, 2036, and 2055, will be used to refinance existing debt and for general corporate purposes. This move is expected to enhance CPKC’s financial flexibility and support its strategic objectives, potentially impacting its market positioning and stakeholder interests.

The most recent analyst rating on (TSE:CP) stock is a Buy with a C$133.00 price target. To see the full list of analyst forecasts on Canadian Pacific Kansas City stock, see the TSE:CP Stock Forecast page.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Aug 27, 2025