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Canadian Pacific's (CP) Earnings and Revenues Miss in Q1

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Canadian Pacific Railway Limited CP reported lower-than-expected earnings and revenues in first-quarter 2018. Results were hurt by rough weather conditions.

The company’s earnings (excluding 23 cents from non-recurring items) of $2.13 per share (C$2.70) lagged the Zacks Consensus Estimate of $2.16. However, the bottom line improved 12.1% from the year-ago figure.

Quarterly revenues increased 8% year over year to $1,312 million (C$1.66 billion) but fell short of the Zacks Consensus Estimate of $1,313 million. Freight revenues, which improved 4% year over year, accounted for bulk (97.8%) of the top line.

The earnings and revenues miss disappointed investors and consequently the stock dipped 1.1% in after-hours trading on Apr 18.

Notably, the company's freight segment consists of Grain (down 9%), Coal (up 2%), Potash (up 14%), Sulfur and Fertilizer (up 3%), Forest products (down 1%), Energy, Chemicals and Plastics (up 13%), Metals, Minerals and Consumer products (up 8%), Automotive (down 7%) and Intermodal (up 13%). In the reported quarter, total freight revenues per revenue ton miles (RTMs) were down 2% year over year. Also, freight revenues per car load remained unchanged year over year.

Operating income (on an adjusted basis) slid 2.3% in the first quarter. Operating ratio (operating expenses as a percentage of revenues on an adjusted basis) came in at 67.5% compared with 65.6% a year ago. Operating expense rose 12.3% year over year.

Canadian Pacific Railway Limited Price, Consensus and EPS Surprise


Canadian Pacific Railway Limited Price, Consensus and EPS Surprise | Canadian Pacific Railway Limited Quote


This Zacks Rank #3 (Hold) company exited the first quarter of 2018 with cash and cash equivalents of C$125 million compared with C$338 million at the end of 2017. Long-term debt totaled C$7,601 million compared with C$7,413 million in December 2017. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Releases

Investors interested in the railroad space are keenly awaiting first-quarter earnings reports from the key players, namely Kansas City Southern KSU, Norfolk Southern Corporation NSC and Union Pacific Corporation UNP. While Kansas City Southern will report first-quarter earnings on Apr 20, Norfolk Southern and Union Pacific will announce the same on Apr 25 and Apr 26, respectively.

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