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Why Canadian Pacific (CP) Stock is Up Since Q2 Earnings Release
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Shares of Canadian Pacific Railway Limited (CP - Free Report) have inched up 1.2% since second-quarter 2022 earnings results release on Jul 28. The uptick can be attributed to this Canadian railroad operator’s better-than-expected earnings per share and revenues. Expressing delight at the performance, CP’s president and CEO Keith Creel said, “After a challenging first quarter of the year, I’m proud of the resiliency and discipline the CP team demonstrated to deliver these results. They continue to display the grit and tenacity it takes to run a world-class North American railroad and deliver for our customers.”
What Does Canadian Pacific’s Earnings Report Unveil?
Canadian Pacific’s second-quarter 2022 earnings (excluding 10 cents from non-recurring items) of 74 cents (C$0.95) per share surpassed the Zacks Consensus Estimate of 69 cents. The bottom line dipped year over year due to high costs.
However, quarterly revenues of $1,725.5 million (C$2,202 million) outperformed the Zacks Consensus Estimate of $1,670.8 million. The top line increased year over year on higher freight revenues.
Freight revenues, contributing 97.8% to the top line, rose 7% on a year-over-year basis. CP’s freight segment consists of Grain (down 17%), Coal (down 4%), Potash (up 28%), Forest products (up 16%), Energy, chemicals and plastics (down 8%), Metals, minerals and consumer products (up 27%), Automotive (up 22%) as well as Intermodal (up 29%). Revenues at the Fertilizers and sulphur sub-segment were up 9% year over year. In the reported quarter, total freight revenues per revenue ton-miles (RTMs) rose 10% year over year. Total freight revenues per carload increased 9% from the year-ago quarter’s reported figure.
On a reported basis, operating income was up 6%, while total operating expenses increased 8% year over year in the quarter under review. Adjusted operating income decreased 6.5%. Operating ratio (operating expenses as a percentage of revenues on an adjusted basis) deteriorated to 59.7% in the June quarter from 55.3% in the year-ago quarter. Lower the value of the metric, the better.
Canadian Pacific expects double-digit RTM-growth in the second half of 2022, leading to volume and earnings growth for the year.
Liquidity
Canadian Pacific, currently carrying a Zacks Rank #3 (Hold), exited the second quarter with cash and cash equivalents of C$154 million compared with C$69 million at the end of 20021. Long-term debt amounted to C$18,372 million compared with C$18,577 million at the end of 2021.
Norfolk Southern’s (NSC - Free Report) quarterly earnings of $3.45 per share surpassed the Zacks Consensus Estimate of $3.44. Moreover, the bottom line improved 5.2% year over year.
Railway operating revenues in the quarter under review came in at $3,250 million, outperforming the Zacks Consensus Estimate of $3,135.1 million. The top line increased 16.1% year over year, with all key segments, such as merchandise, intermodal and coal, registering an improvement in revenues. Revenue per unit rose 16% year over year. Total volumes declined 5% year over year due to network challenges.
CSX Corporation’s (CSX - Free Report) earnings of 50 cents per share (excluding 4 cents from non-recurring items) beat the Zacks Consensus Estimate of 47 cents and improved 25% year over year.
Total revenues of $3,815 million outperformed the Zacks Consensus Estimate of $3,642.2 million. The top line increased 28% year over year on the back of higher revenues in almost all markets, driven by pricing gains, fuel surcharge and contribution from the acquisition of Quality Carriers. Overall revenues per unit increased 27%.
Union Pacific’s (UNP - Free Report) earnings of $2.93 per share surpassed the Zacks Consensus Estimate of $2.82. Moreover, the bottom line increased 3.9% on a year-over-year basis.
Operating revenues of $6,269 million also beat the Zacks Consensus Estimate of $6,105.3 million. The top line climbed 14% on a year-over-year basis owing to higher fuel surcharge revenues, core pricing gains and a positive business mix. Freight revenues increased 14% to $5,842 million. Business volumes, measured by total revenue carloads, were down 1%.
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Why Canadian Pacific (CP) Stock is Up Since Q2 Earnings Release
Shares of Canadian Pacific Railway Limited (CP - Free Report) have inched up 1.2% since second-quarter 2022 earnings results release on Jul 28. The uptick can be attributed to this Canadian railroad operator’s better-than-expected earnings per share and revenues. Expressing delight at the performance, CP’s president and CEO Keith Creel said, “After a challenging first quarter of the year, I’m proud of the resiliency and discipline the CP team demonstrated to deliver these results. They continue to display the grit and tenacity it takes to run a world-class North American railroad and deliver for our customers.”
What Does Canadian Pacific’s Earnings Report Unveil?
Canadian Pacific’s second-quarter 2022 earnings (excluding 10 cents from non-recurring items) of 74 cents (C$0.95) per share surpassed the Zacks Consensus Estimate of 69 cents. The bottom line dipped year over year due to high costs.
However, quarterly revenues of $1,725.5 million (C$2,202 million) outperformed the Zacks Consensus Estimate of $1,670.8 million. The top line increased year over year on higher freight revenues.
Freight revenues, contributing 97.8% to the top line, rose 7% on a year-over-year basis. CP’s freight segment consists of Grain (down 17%), Coal (down 4%), Potash (up 28%), Forest products (up 16%), Energy, chemicals and plastics (down 8%), Metals, minerals and consumer products (up 27%), Automotive (up 22%) as well as Intermodal (up 29%). Revenues at the Fertilizers and sulphur sub-segment were up 9% year over year. In the reported quarter, total freight revenues per revenue ton-miles (RTMs) rose 10% year over year. Total freight revenues per carload increased 9% from the year-ago quarter’s reported figure.
On a reported basis, operating income was up 6%, while total operating expenses increased 8% year over year in the quarter under review. Adjusted operating income decreased 6.5%. Operating ratio (operating expenses as a percentage of revenues on an adjusted basis) deteriorated to 59.7% in the June quarter from 55.3% in the year-ago quarter. Lower the value of the metric, the better.
Canadian Pacific expects double-digit RTM-growth in the second half of 2022, leading to volume and earnings growth for the year.
Liquidity
Canadian Pacific, currently carrying a Zacks Rank #3 (Hold), exited the second quarter with cash and cash equivalents of C$154 million compared with C$69 million at the end of 20021. Long-term debt amounted to C$18,372 million compared with C$18,577 million at the end of 2021.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Key Railroad Operators in Q2
Norfolk Southern’s (NSC - Free Report) quarterly earnings of $3.45 per share surpassed the Zacks Consensus Estimate of $3.44. Moreover, the bottom line improved 5.2% year over year.
Railway operating revenues in the quarter under review came in at $3,250 million, outperforming the Zacks Consensus Estimate of $3,135.1 million. The top line increased 16.1% year over year, with all key segments, such as merchandise, intermodal and coal, registering an improvement in revenues. Revenue per unit rose 16% year over year. Total volumes declined 5% year over year due to network challenges.
CSX Corporation’s (CSX - Free Report) earnings of 50 cents per share (excluding 4 cents from non-recurring items) beat the Zacks Consensus Estimate of 47 cents and improved 25% year over year.
Total revenues of $3,815 million outperformed the Zacks Consensus Estimate of $3,642.2 million. The top line increased 28% year over year on the back of higher revenues in almost all markets, driven by pricing gains, fuel surcharge and contribution from the acquisition of Quality Carriers. Overall revenues per unit increased 27%.
Union Pacific’s (UNP - Free Report) earnings of $2.93 per share surpassed the Zacks Consensus Estimate of $2.82. Moreover, the bottom line increased 3.9% on a year-over-year basis.
Operating revenues of $6,269 million also beat the Zacks Consensus Estimate of $6,105.3 million. The top line climbed 14% on a year-over-year basis owing to higher fuel surcharge revenues, core pricing gains and a positive business mix. Freight revenues increased 14% to $5,842 million. Business volumes, measured by total revenue carloads, were down 1%.