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Canadian Pacific Kansas City (TSE:CP)
TSX:CP
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Canadian Pacific Kansas City
(TSX:CP)
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Rating:74Outperform
Price Target:
C$113.00
â–²(12.93% Upside)
Canadian Pacific Kansas City demonstrates strong financial performance and positive earnings call insights, with robust revenue growth and operational improvements. Technical indicators suggest caution due to potential resistance, and valuation metrics indicate fair pricing. Macroeconomic challenges and industry consolidation concerns are notable risks.
Positive Factors
Revenue Growth
Strong revenue growth reflects the company's ability to expand its market presence and capitalize on demand across its extensive rail network.
Operational Efficiency
Improved operational efficiency enhances profitability and competitive positioning, allowing the company to better manage costs and improve margins.
Labor Relations
Securing long-term labor agreements ensures workforce stability and reduces the risk of operational disruptions, supporting sustained service reliability.
Negative Factors
Free Cash Flow Challenges
Negative free cash flow growth may limit the company's ability to invest in growth opportunities and manage financial obligations effectively.
Trade Policy Headwinds
Ongoing trade policy challenges could hinder revenue growth and operational efficiency, affecting the company's ability to capitalize on international markets.
Intermodal Pricing Pressure
Pricing pressure in the intermodal segment could compress margins and impact revenue growth, challenging the company's profitability in this key area.
Canadian Pacific Kansas City (CP) vs. iShares MSCI Canada ETF (EWC)
Market Cap
$87.98B
Dividend Yield0.82%
Average Volume (3M)1.50M
Price to Earnings (P/E)21.7
Beta (1Y)0.70
Revenue Growth4.02%
EPS Growth21.39%
CountryCA
Employees19,992
SectorIndustrials
Sector Strength72
IndustryRailroads
Share Statistics
EPS (TTM)1.10
Shares Outstanding900,831,240
10 Day Avg. Volume1,118,599
30 Day Avg. Volume1,498,971
Financial Highlights & Ratios
PEG Ratio-4.59
Price to Book (P/B)2.03
Price to Sales (P/S)6.68
P/FCF Ratio40.36
Enterprise Value/Market Cap1.35
Enterprise Value/Revenue7.91
Enterprise Value/Gross Profit15.06
Enterprise Value/Ebitda14.35
Forecast
1Y Price Target
$119.08Price Target Upside19.01% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering14
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
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 goods via its rail network. The main revenue streams include freight charges for moving bulk commodities such as grain, coal, and chemicals, as well as intermodal services that involve transporting shipping containers. The company also earns income from automotive logistics and other specialized freight services. Significant partnerships with various industries, including agriculture and manufacturing, enhance its revenue potential. Additionally, CP benefits from economies of scale and operational efficiencies, which contribute to its overall profitability.
Canadian Pacific Kansas City Earnings Call Summary
Earnings Call Date:Oct 29, 2025
(Q3-2025)
| % Change Since: |
Next Earnings Date:Jan 28, 2026
Earnings Call Sentiment Neutral
The earnings call presented a mixed sentiment. The company reported strong growth in several key areas, including volume, revenue, and operational improvements, while also facing macroeconomic and trade challenges. Concerns about industry consolidation and its potential impacts were highlighted alongside safety and operational achievements.Q3-2025 Updates
Positive Updates
Strong Volume and Revenue Growth
The team delivered strong volume growth in the quarter of 5%. Revenues were up $3.7 billion, up 3%, and earnings per share increased by 11% to $1.10 compared to the previous year.
Operational Improvements
Operating ratio improved by 220 basis points to 60.7%. Terminal dwell improved by 2%, velocity improved by 1%, and train length and train weight both improved by 2%.
Record Performance in Automotive and Intermodal Segments
The automotive segment achieved another record quarter with a 9% volume growth, and Intermodal revenue was up 7% on 11% volume growth.
Safety Improvements
There was a 3% improvement in personal injuries and a 20% improvement in train accident frequency.
Continued Investment in Locomotives
91 out of 100 Tier 4 locomotives scheduled for delivery this year have been received, improving service interruptions by about 30% compared to a year ago.
Negative Updates
Macro and Trade Policy Headwinds
Consistent macro and trade policy headwinds continue to impact performance, including tariffs affecting international trade.
Energy, Chemicals & Plastics Revenue Decline
Revenues and volumes were down 2% due to softer base demand, lower crude and refined fuel volumes, and customs border challenges.
Intermodal Pricing Pressure
Cents per RTM was down 1%, with pricing impacted by mix changes and international trade challenges.
Challenges from Proposed UP and NS Merger
Concerns were expressed about the potential market power and competitive implications of the proposed UP and NS merger.
Company Guidance
During CPKC's Third Quarter 2025 Conference Call, CEO Keith Creel highlighted several key metrics reflecting the company's strong performance and future outlook. The railroad reported a 5% growth in volume, with revenues rising by 3% to $3.7 billion. The operating ratio improved by 220 basis points to 60.7%, and earnings per share increased by 11% to $1.10 compared to the previous year. Creel emphasized the company's commitment to delivering on its guidance of 10% to 14% earnings growth year-over-year, despite external macroeconomic and trade policy challenges. Notably, CPKC achieved record performance in its automotive franchise and saw significant growth in its bulk and intermodal sectors. The company also made substantial strides in safety metrics, with improvements in FRA personal injuries and train accident frequencies. Looking forward, Creel expressed confidence in CPKC's ability to maintain its industry-leading position and drive continued growth, leveraging their unique North-South U.S. network and strategic developments like the new Americold facility in Kansas City.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. While there are some areas of concern, such as declining gross profit margins and fluctuating free cash flow growth, the company's financial position remains strong, supporting its growth trajectory in the railroads industry.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.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.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.| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 15.03B | 14.55B | 12.55B | 8.81B | 8.00B | 7.71B |
| Gross Profit | 7.89B | 7.54B | 6.44B | 4.59B | 4.59B | 4.43B |
| EBITDA | 8.29B | 7.47B | -739.00M | 5.65B | 4.87B | 4.44B |
| Net Income | 4.26B | 3.72B | 3.93B | 3.52B | 2.85B | 2.44B |
Balance Sheet | ||||||
| Total Assets | 62.24B | 88.40B | 80.39B | 73.75B | 68.35B | 23.82B |
| Cash, Cash Equivalents and Short-Term Investments | 295.10M | 739.00M | 464.00M | 451.00M | 82.00M | 147.00M |
| Total Debt | 17.15B | 22.99B | 22.84B | 19.92B | 20.41B | 10.08B |
| Total Liabilities | 28.74B | 39.51B | 37.98B | 34.86B | 34.52B | 16.50B |
| Stockholders Equity | 32.81B | 47.89B | 41.49B | 38.89B | 33.83B | 7.32B |
Cash Flow | ||||||
| Free Cash Flow | 2.39B | 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 | -2.62B | -2.80B | -2.16B | -1.50B | -13.73B | -2.03B |
| Financing Cash Flow | -2.93B | -2.25B | -1.96B | -2.30B | 9.94B | -764.00M |
Canadian Pacific Kansas City Technical Analysis
Negative
100.06
Price Trends
100.93
Negative
102.82
Negative
104.38
Negative
Market Momentum
-0.35
Positive
36.94
Neutral
25.04
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 100.06 is below the 20-day moving average (MA) of 101.84, below the 50-day MA of 100.93, and below the 200-day MA of 104.38, indicating a bearish trend. The MACD of -0.35 indicates Positive momentum. The RSI at 36.94 is Neutral, neither overbought nor oversold. The STOCH value of 25.04 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
UnderperformOutperform
Sector (63)
TSE:CP
Canadian Pacific Kansas City
100.06
-7.76
-7.20%
TSE:CNR
Canadian National Railway
137.89
-4.82
-3.38%
Canadian Pacific Kansas City Corporate Events
Business Operations and StrategyFinancial Disclosures
CPKC Reports Robust Q3 2025 Results Amid Economic Challenges
Positive
Oct 29, 2025
Canadian Pacific Kansas City (CPKC) reported strong third-quarter results for 2025, with revenues reaching $3.7 billion and a significant increase in earnings per share. The company demonstrated resilience amid challenging economic conditions, achieving a 5% increase in volumes and a 3% rise in revenues compared to the previous year. CPKC’s strategic focus on leveraging its North American footprint and maintaining strong service delivery has contributed to its continued growth and market expansion. The company also reported improvements in safety metrics, with decreases in personal injury and train accident frequencies, underscoring its commitment to operational excellence.
The most recent analyst rating on (TSE:CP) stock is a Buy with a C$118.00 price target. To see the full list of analyst forecasts on Canadian Pacific Kansas City stock, see the TSE:CP Stock Forecast page.
Dividends
Canadian Pacific Kansas City Announces Quarterly Dividend
Positive
Oct 29, 2025
Canadian Pacific Kansas City Limited has announced a quarterly dividend of $0.228 per share, payable on January 26, 2026, to shareholders of record as of December 31, 2025. This declaration underscores CPKC’s commitment to delivering shareholder value and reflects its strong financial position, further solidifying its status as a key player in the North American rail industry.
The most recent analyst rating on (TSE:CP) stock is a Buy with a C$118.00 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.