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Canadian Pacific (CP) Misses Q3 Earnings & Revenue Estimates

Canadian Pacific Railway Limited CP posted lower-than-expected earnings and revenues in third-quarter 2018 results. The company’s earnings (excluding 18 cents from non-recurring items) of $3.15 per share (C$4.12) missed the Zacks Consensus Estimate of $3.16. The downtrend was primarily caused by escalating fuel prices and increased operating expenses. However, the bottom line improved 36.4% from the prior-year quarter’s figure.

Quarterly revenues of $1452.3 million (C$1.9 billion) lagged the consensus estimate of $1466.1 million. Nevertheless, the top line improved 14.2% from the year-ago quarter’s tally. Freight revenues improved 19.8% year over year and contributed 97.7% to the top line.

Notably, the company’s freight segment consists of Grain (up 9%), Coal (up 4%), Potash (up 26%), Fertilizers and sulfur (up 6%), Forest products (up 13%), Energy, chemicals and plastics (up 63%), Metals, minerals and consumer products (up 8%), Automotive (up 25%) as well as Intermodal (up 19%). In the reported quarter, total freight revenue per revenue ton-miles (RTMs) were up 6% year over year. Also, freight revenue per car load improved 14% from the year-ago quarter’s tally.

Canadian Pacific Railway Limited Price, Consensus and EPS Surprise

 

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

 

Operating income (on an adjusted basis) rallied 27% in the quarter under review. Operating ratio (operating expenses, as a percentage of revenues, on an adjusted basis) came in at 58.4% compared with 61% in the prior-year quarter. Operating expenses rose 13.9% year over year.

Liquidity

This Zacks Rank #1 (Strong Buy) company exited the quarter with cash and cash equivalents of C$150 million compared with C$338 million at the end of 2017. Long-term debt amounted to C$7806 million compared with C$7413 million in December 2017. You can see the complete list of today’s Zacks #1 Rank stocks here.

Update on Share Repurchase Program

Canadian Pacific announced that Toronto Stock Exchange has accepted the company’s notice for execution of a normal course issuer bid (NCIB) to purchase, for cancellation, upto 5,682,940 shares of common stock. The NCIB will commence on Oct 24, 2018 and terminate a year later.

Upcoming Releases

Investors interested in the Zacks Rail industry are awaiting third-quarter earnings reports from railroad companies like Canadian National Railway Company CNI, Norfolk Southern Corporation NSC and Genesee & Wyoming Inc. GWR. Canadian National Railway Company will release results on Oct 23. Norfolk Southern and Genesee & Wyoming will announce the same on Oct 24 and Oct 30, respectively.

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Norfolk Southern Corporation (NSC) : Free Stock Analysis Report
 
Canadian Pacific Railway Limited (CP) : Free Stock Analysis Report
 
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Canadian National Railway Company (CNI) : Free Stock Analysis Report
 
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