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Canadian Pacific (CP) Beats Q4 Earnings & Revenue Estimates

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Canadian Pacific Railway Limited (CP - Free Report) delivered impressive fourth-quarter 2018 results, with earnings and revenues beating the Zacks Consensus Estimate.

The impressive quarterly performance has raised investors’ optimism on the stock. As a result, shares of the company have inched up 1.3% in after-hours trading on Jan 23.

The transportation company’s earnings (excluding 55 cents from non-recurring items) of $3.45 per share (C$4.55) outpaced the Zacks Consensus Estimate of $3.18. Moreover, the bottom line improved 35.8% on a year-over-year basis. The figures were aided by higher revenues.

Quarterly revenues came in at $1,518 million (C$2 billion), beating the Zacks Consensus Estimate of $1,452 million. Also, the top line improved 12.5% on a year-over-year basis. Strong freight revenues boosted the top line.

Freight revenues improved 17.8% year over year and contributed 97.9% to the top line. Notably, the company’s freight segment consists of Grain (up 7%), Coal (up 22%), Potash (up 27%), Fertilizers and sulfur (up 20%), Forest products (up 16%); Energy, chemicals and plastics (up 49%); Metals, minerals and consumer products (up 8%); Automotive (up 7%) as well as Intermodal (up 12%). In the reported quarter, total freight revenue per revenue ton-miles (RTMs) were up 8% year over year. Also, total freight revenue per car load improved 13% from the year-ago quarter’s tally.

Operating income increased 28.2% in the quarter under review. Operating ratio (operating expenses, as a percentage of revenues, on an adjusted basis) improved to 56.5% from 60.2% in the prior-year quarter. Notably, lower value of this key metric bodes well. Operating expenses rose 9.8% 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

Liquidity

This Zacks Rank #2 (Buy) company exited 2018 with cash and cash equivalents of C$61 million compared with C$338 million at the end of 2017. Long-term debt amounted to C$8,190 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.

Share Repurchases

As a part of the buyback program announced on Oct 19, 2018, Canadian Pacific repurchased around 2.2 million shares for approximately C$568 million at a weighted average price of C$259.74 per share in the quarter under discussion.

2019 Outlook

For 2019, the company anticipates adjusted earnings per share to grow in double digits. RTMs are expected to witness mid-single digit growth.
Capital expenditures are projected around C$1.6 billion. Canadian Pacific is optimistic about growth opportunities in Grain, Potash, Energy, Forest Products, Intermodal as well as Energy, Chemicals and Plastics segments.

Upcoming Releases

Investors interested in the Zacks Transportation Sector are keenly awaiting fourth-quarter 2018 earnings reports from key players like ArcBest Corporation (ARCB - Free Report) , Allegiant Travel Company (ALGT - Free Report) and SkyWest, Inc. (SKYW - Free Report) . While ArcBest and Allegiant are scheduled to report fourth-quarter earnings on Jan 30, SkyWest will release the same on Jan 31.

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