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Canadian Pacific Kansas City (TSE:CP)
TSX:CP
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Canadian Pacific Kansas City
(TSX:CP)
Rating:75Outperform
Price Target:
C$118.00
▲(13.48% Upside)
Canadian Pacific Kansas City (CP) vs. iShares MSCI Canada ETF (EWC)
Market Cap
$95.45B
Dividend Yield0.77%
Average Volume (3M)1.62M
Price to Earnings (P/E)23.2
Beta (1Y)0.77
Revenue Growth4.77%
EPS Growth20.28%
CountryCA
Employees19,992
SectorIndustrials
Sector Strength71
IndustryRailroads
Share Statistics
EPS (TTM)1.12
Shares Outstanding917,976,300
10 Day Avg. Volume1,801,430
30 Day Avg. Volume1,623,606
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)N/A
P/FCF RatioN/A
Enterprise Value/Market Cap1.28
Enterprise Value/Revenue8.21
Enterprise Value/Gross Profit17.05
Enterprise Value/Ebitda15.10
Forecast
1Y Price Target
$123.18Price Target Upside18.46% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering18
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
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.85
Very Positive
Balance Sheet
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.78
Positive
Cash Flow
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.82
Very Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 14.92B | 14.55B | 12.55B | 8.81B | 8.00B | 7.71B |
| Gross Profit | 7.18B | 7.54B | 6.44B | 4.59B | 4.59B | 4.43B |
| EBITDA | 8.11B | 7.47B | -739.00M | 5.65B | 4.87B | 4.44B |
| Net Income | 4.18B | 3.72B | 3.93B | 3.52B | 2.85B | 2.44B |
Balance Sheet | ||||||
| Total Assets | 85.18B | 88.40B | 80.39B | 73.75B | 68.35B | 23.82B |
| Cash, Cash Equivalents and Short-Term Investments | 799.00M | 739.00M | 464.00M | 451.00M | 82.00M | 147.00M |
| Total Debt | 22.27B | 22.99B | 22.84B | 19.92B | 20.41B | 10.08B |
| Total Liabilities | 38.03B | 39.51B | 37.98B | 34.86B | 34.52B | 16.50B |
| Stockholders Equity | 46.20B | 47.89B | 41.49B | 38.89B | 33.83B | 7.32B |
Cash Flow | ||||||
| Free Cash Flow | 2.50B | 2.41B | 1.64B | 2.58B | 2.16B | 1.13B |
| Operating Cash Flow | 5.49B | 5.27B | 4.14B | 4.14B | 3.69B | 2.80B |
| Investing Cash Flow | -2.49B | -2.80B | -2.16B | -1.50B | -13.73B | -2.03B |
| Financing Cash Flow | -2.74B | -2.25B | -1.96B | -2.30B | 9.94B | -764.00M |
Canadian Pacific Kansas City Technical Analysis
Negative
103.98
Price Trends
105.59
Negative
106.75
Negative
106.76
Negative
Market Momentum
-0.11
Negative
47.68
Neutral
32.79
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 103.98 is below the 20-day moving average (MA) of 104.16, below the 50-day MA of 105.59, and below the 200-day MA of 106.76, indicating a bearish trend. The MACD of -0.11 indicates Negative momentum. The RSI at 47.68 is Neutral, neither overbought nor oversold. The STOCH value of 32.79 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 (63)
Financial Indicators
Performance Comparison
TSE:CP
Canadian Pacific Kansas City
104.57
-13.16
-11.18%
CNI
Canadian National Railway
93.42
-24.29
-20.64%
TFII
TFI International
94.61
-47.67
-33.50%
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.