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Canadian Pacific Kansas City (TSE:CP)
TSX:CP

Canadian Pacific Kansas City (CP) AI Stock Analysis

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Canadian Pacific Kansas City

(TSX:CP)

Rating:75Outperform
Price Target:
C$115.00
â–²(4.25%Upside)
Canadian Pacific Kansas City's stock is supported by strong financial performance and positive earnings call highlights, indicating robust operational efficiency and growth prospects. However, the high valuation and bearish technical signals present challenges. The recent corporate events contribute positively, balancing the valuation concerns and technical weaknesses.
Positive Factors
Dividend Increase
Management increased the quarterly dividend by 20% and expects to finish its buyback by year end.
Intermodal Volume Growth
The Gemini Alliance should continue to drive intermodal volume growth, especially with Canadian network operations running strong and not seeing any impact from a freight air pocket.
Technology Advancements
CPKC sees big technology tailwinds that will improve safety and provide meaningful financial benefits.
Negative Factors
Adjusted EPS Growth Target
The company lowered its core adjusted EPS growth target to 10%-14% from 12%-18% due to economic and trade policy uncertainties.
Auto Volume Impact
CPKC faces potential negative impacts on auto volumes due to tariffs on non-US auto content imported from Canada and Mexico.
Currency Impact
Appreciation in the CAD compared to initial guidance negatively impacts EPS growth by approximately 200 basis points.

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

Canadian Pacific Kansas City Business Overview & Revenue Model

Company DescriptionCanadian Pacific Kansas City (CPKC) is a leading North American transportation company formed through the merger of Canadian Pacific Railway and Kansas City Southern. Operating in the railway sector, CPKC provides freight transportation services across Canada, the United States, and Mexico. The company is known for its efficient rail network that facilitates the movement of diverse commodities such as grain, coal, automotive products, and intermodal containers, connecting major markets across the continent.
How the Company Makes MoneyCanadian Pacific Kansas City generates revenue primarily through its freight transportation services. Key revenue streams include the transport of bulk commodities like grain, coal, and fertilizers, as well as merchandise such as automotive products, industrial goods, and consumer items. Intermodal transportation, which involves shipping containers that can be transferred across different modes of transport, also contributes significantly to its earnings. Additionally, CPKC benefits from strategic partnerships and network agreements that enhance its service offerings and expand its market reach. The company also leverages its real estate and logistics capabilities to support its core operations and drive additional revenue.

Canadian Pacific Kansas City Earnings Call Summary

Earnings Call Date:Apr 30, 2025
(Q1-2025)
|
% Change Since: 10.17%|
Next Earnings Date:Jul 24, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong revenue and earnings growth, operational efficiencies, and successful divestment and capital return, amidst record safety performance and new trade opportunities between Canada and Mexico. However, macroeconomic uncertainties and challenges in U.S. grain and steel due to trade policies were noted.
Q1-2025 Updates
Positive Updates
Strong Revenue and Earnings Growth
First quarter revenue was $3.8 billion, up 8% year-over-year. Earnings grew by 14%, producing $1.06 per share.
Record Performance in Safety
The company achieved a record performance from a safety perspective with significant improvements in train accidents and personal injuries.
Successful Divestment and Capital Return
CPKC divested its 50% stake in the Panama Canal Railway, focusing on core business, and announced a 20% increase in its quarterly dividend along with a new 4% share buyback program.
Operational Efficiency Gains
Train weight and length increased by 5% and 4% respectively, locomotive productivity improved by 3%, and fuel efficiency remained flat despite challenging winter conditions.
Growth in Mexico and Canada Trade
New trade opportunities emerged between Canada and Mexico, with increased refined fuels, LPGs, plastics, and grains being transported.
Strong Bulk Business Performance
Grain and potash experienced volume growth, with Canadian grain volumes up 12% and potash revenues up 10%.
Negative Updates
Macro and Trade Policy Uncertainty
Uncertainties in trade policies and currency fluctuations led to a cautious adjustment in guidance.
Impact on U.S. Grain and Steel
U.S. grain volumes were down 5% due to reduced exports, and there were concerns about lower cross-border steel demand due to tariffs.
Automotive and Steel Tariff Challenges
The automotive sector faced potential risks and choppiness due to tariffs, impacting cross-border flows.
Company Guidance
During the CPKC First Quarter 2025 Conference Call, the company reported strong performance with an 8% increase in revenue to $3.8 billion, driven by a 4% rise in volume and a 150 basis point improvement in the operating ratio to 62.5. Earnings per share grew by 14% to $1.06. The company highlighted record safety performance, with a 58% reduction in train accidents and a 14% improvement in personal injuries. Despite macroeconomic uncertainties and trade policy changes, CPKC remains optimistic about its growth prospects, particularly through its unique three-nation network and new market opportunities between Canada and Mexico. The company also announced a 4% share buyback program and a 20% increase in the quarterly dividend, further demonstrating its commitment to returning value to shareholders amidst market volatility.

Canadian Pacific Kansas City Financial Statement Overview

Summary
Canadian Pacific Kansas City's financial performance is robust, marked by strong profitability, stable revenue growth, and efficient cash flow generation. The balance sheet reflects moderate leverage and a strong equity position, supporting long-term financial health. Despite minor fluctuations in free cash flow, the overall trajectory is positive, bolstering the company's financial resilience.
Income Statement
85
Very Positive
Canadian Pacific Kansas City demonstrates strong profitability with a robust gross profit margin of 41.0% and a solid net profit margin of 26.0% TTM (Trailing-Twelve-Months). Revenue growth is evident, with a 1.9% increase from the previous year, indicating stable operational performance. The EBIT margin stands at 36.3%, and the EBITDA margin is 51.8%, reflecting efficient cost management and operational leverage.
Balance Sheet
78
Positive
The company maintains a healthy balance sheet with a debt-to-equity ratio of 0.47, suggesting a moderate level of leverage. The return on equity (ROE) is 8.0%, which indicates effective utilization of shareholder funds. The equity ratio of 54.8% shows a strong equity position, contributing to financial stability.
Cash Flow
80
Positive
Cash flow performance is solid, with a free cash flow to net income ratio of 0.61, indicating effective conversion of profits into cash. The operating cash flow to net income ratio is 1.40, showing strong cash generation relative to net income. The free cash flow growth rate is -2.1%, reflecting a slight decrease but remains positive overall.
Breakdown
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
14.82B14.55B12.55B8.81B8.00B7.71B
Gross Profit
6.08B5.18B6.38B4.59B4.42B4.36B
EBIT
5.38B5.18B4.39B4.80B3.21B3.31B
EBITDA
7.68B7.48B-731.00M4.58B4.85B4.44B
Net Income Common Stockholders
3.85B3.72B3.93B3.52B2.85B2.44B
Balance SheetCash, Cash Equivalents and Short-Term Investments
695.00M739.00M464.00M451.00M69.00M147.00M
Total Assets
88.04B87.74B80.39B73.50B68.18B23.64B
Total Debt
22.65B22.99B22.84B19.65B20.13B9.77B
Net Debt
21.96B22.25B22.37B19.20B20.06B9.62B
Total Liabilities
38.80B38.85B37.98B34.61B34.35B16.32B
Stockholders Equity
48.25B47.89B41.49B38.89B33.83B7.32B
Cash FlowFree Cash Flow
2.35B2.41B1.64B2.58B2.16B1.13B
Operating Cash Flow
5.41B5.27B4.14B4.14B3.69B2.80B
Investing Cash Flow
-2.97B-2.80B-2.16B-1.50B-13.73B-2.03B
Financing Cash Flow
-2.31B-2.25B-1.96B-2.30B9.94B-764.00M

Canadian Pacific Kansas City Technical Analysis

Technical Analysis Sentiment
Neutral
Last Price110.31
Price Trends
50DMA
106.75
Positive
100DMA
107.42
Positive
200DMA
108.28
Positive
Market Momentum
MACD
0.62
Positive
RSI
49.90
Neutral
STOCH
22.84
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:CP, the sentiment is Neutral. The current price of 110.31 is below the 20-day moving average (MA) of 111.20, above the 50-day MA of 106.75, and above the 200-day MA of 108.28, indicating a neutral trend. The MACD of 0.62 indicates Positive momentum. The RSI at 49.90 is Neutral, neither overbought nor oversold. The STOCH value of 22.84 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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 (66)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
TSCNR
78
Outperform
$87.56B19.5421.81%2.54%2.60%-15.63%
TSCP
75
Outperform
$103.17B26.908.50%0.69%7.33%-1.42%
66
Neutral
$4.46B12.115.38%5.02%4.17%-11.82%
63
Neutral
$10.40B19.6314.78%2.12%16.00%-17.63%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TSE:CP
Canadian Pacific Kansas City
110.31
3.34
3.12%
TSE:TFII
TFI International
121.65
-63.58
-34.33%
TSE:CNR
Canadian National Railway
139.75
-18.01
-11.41%

Canadian Pacific Kansas City Corporate Events

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.

Executive/Board ChangesShareholder Meetings
CPKC Announces 2025 Director Election Results and Shareholder Approvals
Positive
May 1, 2025

Canadian Pacific Kansas City announced the results of its 2025 annual meeting, where all 12 director nominees were elected with at least 97% of votes. Isabelle Courville was re-appointed as Chair of the Board. The advisory votes on executive compensation and climate change received 87.74% and 91.66% approval, respectively, while Ernst & Young LLP was appointed as auditor with 99.61% approval. These results reflect strong shareholder support for CPKC’s leadership and strategic direction, potentially strengthening its industry position and stakeholder confidence.

Business Operations and StrategyFinancial Disclosures
Canadian Pacific Kansas City Reports Robust Q1 2025 Results Amid Market Challenges
Positive
Apr 30, 2025

Canadian Pacific Kansas City reported strong first-quarter results for 2025, with revenues reaching $3.8 billion and a notable increase in earnings per share. The company attributes its success to precision execution and a resilient network amidst challenging market conditions. Despite uncertainties in trade policies and economic recession risks, CPKC maintains a positive long-term outlook, adjusting its earnings guidance to reflect these challenges while continuing to prioritize safety and efficiency in its operations.

M&A TransactionsDividends
CPKC Boosts Dividend by 20% Following Successful Merger
Positive
Apr 30, 2025

Canadian Pacific Kansas City (CPKC) announced a 20% increase in its quarterly dividend, raising it to $0.228 per share. This decision reflects the company’s commitment to returning cash to shareholders and follows the successful merger of Canadian Pacific and Kansas City Southern. The increase highlights the strength of CPKC’s operating model and its focus on creating shareholder value.

M&A TransactionsBusiness Operations and Strategy
CPKC Sells Panama Canal Railway to APM Terminals
Positive
Apr 3, 2025

Canadian Pacific Kansas City (CPKC) and Lanco Group/Mi-Jack have sold the Panama Canal Railway Company (PCRC) to APM Terminals, a division of A.P. Moller – Maersk. This sale aligns with CPKC’s strategy to optimize its assets and focus on its core North American rail business. The transaction is expected to create value for shareholders and enhance APM Terminals’ service offerings in the region, leveraging PCRC’s operational excellence to expand intermodal container movement services.

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.