Canadian Pacific Kansas City Limited (TSE:CP)
NYSE:CP
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Canadian Pacific Kansas City
(NYSE:CP)
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Rating:72Outperform
Price Target:
C$139.00
â–²(24.50% Upside)
Action:Reiterated
Date:05/04/26
The score is driven primarily by solid underlying profitability and a generally manageable balance sheet, but is held back by the TTM revenue drop and weaker free-cash-flow performance. Technicals are supportive with price above key moving averages, while valuation is a headwind due to a higher P/E and low dividend yield. The latest earnings call was constructive, with reaffirmed double-digit EPS guidance, buybacks/dividend growth, and operational productivity gains, offset by near-term yield/FX and segment softness.
Positive Factors
Strong profitability and cash generation
High TTM gross and net margins, combined with roughly $5.1B of operating cash flow, indicate durable unit economics and the ability to convert earnings into cash. This supports reinvestment, debt servicing and shareholder returns over the medium term even if volumes fluctuate.
Negative Factors
Sharp TTM revenue decline
A 62% TTM revenue drop is a material structural headwind that can erode scale economies, pricing leverage and network utilization. If sustained or recurrent, it undermines revenue predictability, makes cost absorption harder and increases sensitivity of margins to cyclical demand shocks.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong profitability and cash generation
High TTM gross and net margins, combined with roughly $5.1B of operating cash flow, indicate durable unit economics and the ability to convert earnings into cash. This supports reinvestment, debt servicing and shareholder returns over the medium term even if volumes fluctuate.
Read all positive factors
Canadian Pacific Kansas City (CP) vs. iShares MSCI Canada ETF (EWC)
Market Cap
C$107.25B
Dividend Yield0.82%
Average Volume (3M)1.17M
Price to Earnings (P/E)24.6
Beta (1Y)0.68
Revenue Growth1.10%
EPS Growth8.73%
CountryCA
Employees19,992
SectorIndustrials
Sector Strength72
IndustryRailroads
Share Statistics
EPS (TTM)4.89
Shares Outstanding887,736,400
10 Day Avg. Volume1,085,718
30 Day Avg. Volume1,167,373
Financial Highlights & Ratios
PEG Ratio1.65
Price to Book (P/B)2.02
Price to Sales (P/S)6.14
P/FCF Ratio42.68
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$133.31Price Target Upside19.40% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering15
EPS Forecast (FY)5.14
Revenue Forecast (FY)C$16.05B
Canadian Pacific Kansas City Business Overview & Revenue Model
Company Description
Canadian Pacific Kansas City Ltd. provides essential rail freight transportation services. The firm operates an extensive railway network, creating vital connections between Canada, the United States, and Mexico. Established on June 22, 2001, the ...
How the Company Makes Money
CPKC primarily makes money by charging customers for freight transportation services on its rail network. Revenue is generated from moving carload and intermodal shipments across multiple commodity groups (e.g., bulk commodities, industrial produc...
Canadian Pacific Kansas City Earnings Call Summary
Earnings Call Date:Apr 29, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Aug 05, 2026
Earnings Call Sentiment Positive
The call conveyed strong operational momentum and several material wins — record grain volumes, measurable productivity gains (train weight/length, locomotive productivity, velocity), meaningful shareholder returns (buybacks and a 17.5% dividend increase), and new commercial contracts/SMX launch. Offsetting these positives were near-term revenue and yield pressures (freight revenue -3%, cents/RTM -4%), FX and fuel timing effects, coal and forest product segment weakness, and modest deterioration in some safety and below-the-line metrics. Management characterized many headwinds as transitory and expects Q2 reacceleration, returning to double-digit EPS growth later in the year.Positive Updates
Quarterly Revenue and Volume
Total revenues of $3.7 billion for Q1 FY2026 with RTM volume growth of 2% and management reporting record Q1 RTM growth (6 of the past 7 years for the franchise).
Negative Updates
Freight Revenue and Yield Pressures
Freight revenue declined 3% YoY while cents per RTM fell ~4% due to FX headwinds, removal of the Canadian federal carbon tax (mix effect), and negative mix; management noted yields were pressured in Q1.
Read all updates
Q1-2026 Updates
Positive
Negative
Quarterly Revenue and Volume
Total revenues of $3.7 billion for Q1 FY2026 with RTM volume growth of 2% and management reporting record Q1 RTM growth (6 of the past 7 years for the franchise).
Read all positive updates
Company Guidance
CPKC reaffirmed a constructive 2026 outlook, guiding full‑year CapEx of $2.65 billion (a 15% reduction YoY), a core adjusted effective tax rate of ~24.75%, a new buyback authorization of up to 45 million shares (and $680 million repurchased in Q1), and a 17.5% dividend increase while saying it expects to return to double‑digit EPS growth in Q2 and the second half and to deliver on full‑year double‑digit EPS guidance; Q1 baselines were revenues $3.7B, RTMs +2%, reported OR 66% (core adjusted OR 63%, +50 bps YoY), diluted EPS $0.94 (core adjusted EPS $1.04, -2% YoY), fuel expense $458M, net interest ~$228M ($223M ex‑purchase accounting), $127M materials, $95M equipment rents, and continued operational momentum (train weight +9% and length +7% since Q1‑24, locomotive productivity +8%, fuel efficiency +2%, system velocity +4%) with safety metrics FRA personal injury 0.91 and train accident frequency 0.93; management said pricing renewals exceeded the top end of its 3–4% long‑term outlook and that cents/RTM should inflect positive in Q2 as FX, the carbon tax lapse and fuel surcharge timing normalize.Canadian Pacific Kansas City Financial Statement Overview
Summary
Income Statement
78
Positive
Balance Sheet
73
Positive
Cash Flow
68
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 16.43B | 15.08B | 14.55B | 12.55B | 8.81B | 8.00B |
| Gross Profit | 7.93B | 6.08B | 7.54B | 6.44B | 4.59B | 4.59B |
| EBITDA | 9.07B | 8.37B | 7.47B | -739.00M | 5.65B | 4.87B |
| Net Income | 4.44B | 4.14B | 3.72B | 3.93B | 3.52B | 2.85B |
Balance Sheet | ||||||
| Total Assets | 87.68B | 85.94B | 88.40B | 80.39B | 73.75B | 68.35B |
| Cash, Cash Equivalents and Short-Term Investments | 409.00M | 184.00M | 739.00M | 464.00M | 451.00M | 82.00M |
| Total Debt | 24.32B | 23.19B | 22.99B | 22.84B | 19.92B | 20.41B |
| Total Liabilities | 40.27B | 39.12B | 39.51B | 37.98B | 34.86B | 34.52B |
| Stockholders Equity | 46.45B | 45.88B | 47.89B | 41.49B | 38.89B | 33.83B |
Cash Flow | ||||||
| Free Cash Flow | 2.20B | 2.17B | 2.41B | 1.64B | 2.58B | 2.16B |
| Operating Cash Flow | 5.63B | 5.31B | 5.27B | 4.14B | 4.14B | 3.69B |
| Investing Cash Flow | -2.97B | -2.67B | -2.80B | -2.16B | -1.50B | -13.73B |
| Financing Cash Flow | -3.05B | -3.15B | -2.25B | -1.96B | -2.30B | 9.94B |
Canadian Pacific Kansas City Technical Analysis
Positive
111.65
Price Trends
119.04
Positive
115.24
Positive
108.56
Positive
Market Momentum
0.97
Positive
45.88
Neutral
13.65
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:CP, the sentiment is Positive. The current price of 111.65 is below the 20-day moving average (MA) of 123.96, below the 50-day MA of 119.04, and above the 200-day MA of 108.56, indicating a neutral trend. The MACD of 0.97 indicates Positive momentum. The RSI at 45.88 is Neutral, neither overbought nor oversold. The STOCH value of 13.65 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 0 New Risks
Canadian Pacific Kansas City Peers Comparison
UnderperformOutperform
Sector (63)
TSE:CP
Canadian Pacific Kansas City
120.81
12.09
11.12%
TSE:CNR
Canadian National Railway
159.73
22.66
16.53%
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.