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Canadian Pacific (CP) Q1 Earnings Beat, Revenues Miss Mark

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·4 min read
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Canadian Pacific Railway Limited’s CP first-quarter 2021 earnings (excluding a penny from non-recurring items) of $3.54 (C$4.48) per share surpassed the Zacks Consensus Estimate of $3.47. Quarterly earnings increased 7.3% on a year-over-year basis due to low costs.

However, quarterly revenues of $1,547 million (C$1,959 million) missed the Zacks Consensus Estimate of $1,581.8 million. The top line was hurt by a decline in freight revenues.

Freight revenues, contributing 97.9% to the top line, fell 4.1% on a year-over-year basis. The company’s freight segment consists of Grain (up 7.2%), Coal (up 8.7%), Potash (down 9.8%), Fertilizers and sulphur (up 10%), Forest products (up 2.6%), Energy, chemicals and plastics (down 21%), Metals, minerals and consumer products (down 15.9%), Automotive (up 24.1%), and Intermodal (down 2.7%). In the reported quarter, total freight revenues per revenue ton-miles (RTMs) slipped 4% year over year. Total freight revenues per carload also declined 4% from the year-ago quarter’s reported figure.

Canadian Pacific Railway Limited Price, Consensus and EPS Surprise

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

Canadian Pacific Railway Limited price-consensus-eps-surprise-chart | Canadian Pacific Railway Limited Quote


Operating income dropped 6%, while operating expenses dipped 2% year over year in the quarter under review. Operating ratio (operating expenses as a percentage of revenues on an adjusted basis) deteriorated to 60.2% in the first quarter from 59.2% in the year-ago quarter. The downside was due to $33 million cost incurred in relation to its impending acquisition of Kansas City Southern KSU. Notably, a lower value of the operating ratio bodes well.

Both Canadian Pacific and Kansas City Southern carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Liquidity

The company exited the first quarter with cash and cash equivalents of C$360 million compared with C$247 million at the end of the first quarter of 2020. Long-term debt amounted to C$7,958 million compared with C$8,585 million at the end of December 2020.

2021 Guidance

Canadian Pacific anticipates adjusted earnings per share to increase in double-digits in 2021 compared with C$17.67 reported in 2020. Additionally, volumes, measured in RTMs, are expected to be in high single digits. Capital expenditures for the year are estimated at C$1.55 billion.

Sectorial Snapshot

Within the broader Transportation sector, Delta Air Lines DAL and J.B. Hunt Transport Services JBHT recently reported first-quarter 2021 results.

Delta, carrying a Zacks Rank #4 (Sell), incurred a loss (excluding $1.70 from non-recurring items) of $3.55 per share, wider than the Zacks Consensus Estimate of a loss of $3.08. Meanwhile, total revenues of $4,150 million topped the Zacks Consensus Estimate of $3,821.3 million.

J.B. Hunt, a Zacks #3-Ranked player, reported earnings of $1.37 per share, beating the Zacks Consensus Estimate of $1.18. Total operating revenues of $2,618.1 million also surpassed the Zacks Consensus Estimate of $2,486.9 million.

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Kansas City Southern (KSU) : Free Stock Analysis Report

Delta Air Lines, Inc. (DAL) : Free Stock Analysis Report

J.B. Hunt Transport Services, Inc. (JBHT) : Free Stock Analysis Report

Canadian Pacific Railway Limited (CP) : Free Stock Analysis Report

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