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Canadian Pacific (CP) Q4 Earnings Beat Estimates, Rise Y/Y

Zacks Equity Research
·3 min read

Shares of Canadian Pacific Railway Limited CP closed yesterday’s trading session 1% higher following its outperformance in fourth-quarter 2019 results.

The company’s earnings (excluding 4 cents from non-recurring items) of $3.61 per share (C$4.77) surpassed the Zacks Consensus Estimate of $3.55. Quarterly earnings also increased 5% year over year despite higher operating expenses.
 
Quarterly revenues of $1,567.6 million (C$2.07 billion) surpassed the Zacks Consensus Estimate of $1,551.5 million. The top line also inched up 3% year over year on rise in freight revenues.

Freight revenues rose 3.1% year over year and contributed 97.8% to the top line. Notably, the company’s freight segment consists of Grain (up 4%), Coal (down 10%), Potash (down 26%), Fertilizers and sulfur (down 11%), Forest products (up 3%), Energy, chemicals and plastics (up 33%), Metals, minerals and consumer products (down 14%), Automotive (up 13%) and Intermodal (down 1%). In the reported quarter, total freight revenues per revenue ton-miles (RTMs) were up 6% year over year. Also, total freight revenues per carload climbed 4% from the year-ago reported figure.

Operating income inched up 1.8% in the quarter under review. Operating expenses climbed 4% year over year. Operating ratio (operating expenses as a percentage of revenues on an adjusted basis) deteriorated to 57% from 56.5% in the prior-year quarter. Notably, lower value of this key metric bodes well. Capital spending during 2019 was C$1.65 billion.

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


Liquidity

This Zacks Rank #3 (Hold) company exited the fourth quarter with cash and cash equivalents of C$133 million compared with C$61 million at the end of 2018. Long-term debt amounted to C$8.16 billion compared with C$8.19 billion in December 2018.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

2020 Outlook

The company anticipates its 2020 adjusted earnings per share to increase in the high single-digit to low double-digit range from C$16.44 reported in 2019. Volume growth (measured by revenue ton miles) is expected in mid-single digits. Capital expenditures are estimated at $1.6 billion.

Upcoming Releases

Investors interested in the broader Transportation sector are keenly awaiting fourth-quarter earnings reports from key players, such as Old Dominion Freight Line, Inc. ODFL, Air Lease Corporation AL and Copa Holdings, S.A. CPA. While Old Dominion will release earnings numbers on Feb 6, Copa and Air Lease will announce the same on Feb 12 and Feb 14, respectively.

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Copa Holdings, S.A. (CPA) : Free Stock Analysis Report
 
Air Lease Corporation (AL) : Free Stock Analysis Report
 
Canadian Pacific Railway Limited (CP) : Free Stock Analysis Report
 
Old Dominion Freight Line, Inc. (ODFL) : Free Stock Analysis Report
 
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