We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Canadian Pacific (CP) Q1 Earnings Beat, 2020 View Bearish
Read MoreHide Full Article
Canadian Pacific Railway Limited’s (CP - Free Report) first-quarter 2020 earnings (excluding $1.08 from non-recurring items) of $3.3 (C$4.42) per share surpassed the Zacks Consensus Estimate of $2.86. Quarterly earnings also improved more than 55% year over year, primarily owing to low operating expenses.
Quarterly revenues of$1,523.3 million (C$2,043) surpassed the Zacks Consensus Estimate of $1,412.3 million. The top line also increased in double digits year over year owing to rise in freight revenues.
Freight revenues rose 15.9% year over year and contributed 97.9% to the top line. Notably, the company’s freight segment consists of Grain (up 10%), Coal (down 5.1%), Potash (down 1.7%), Fertilizers and sulfur (up 22.8%), Forest products (up 6.8%), Energy, chemicals and plastics (up 55.9%), Metals, minerals and consumer products (up 9.2%), Automotive (up 14.5%) and Intermodal (up 6.6%). 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 7% from the year-ago reported figure.
Operating income surged 53.6% in the quarter under review. Operating expenses dipped 1.2% year over year. Consequently, operating ratio (operating expenses as a percentage of revenues on an adjusted basis) improved to 59.2% in the first quarter from 69.3% in the year-ago period. Notably, lower value of this key metric bodes well. Capital spending during the first quarter was C$355 million.
Canadian Pacific Railway Limited Price, Consensus and EPS Surprise
The Zacks Rank #4 (Sell) company exited the first quarter with cash and cash equivalents of C$247 million compared with C$352 million at the end of the year-ago period. Long-term debt amounted to C$9,804 million compared with C$8,158 million at the end of December 2019.
With softness in demand due to coronavirus, the company now anticipates volumes, measured in revenue ton miles, to decline in mid-single digits in the current year (previously volumes were expected to rise in mid-single digits). Additionally, adjusted earnings per share are expected to be approximately flat year over year. Earlier, adjusted earnings per share were predicted to increase in the high single-digit to low double-digit range from C$16.44 reported in 2019. However, capital expenditures are still anticipated to be C$1.6 billion in 2020.
Upcoming Releases
Investors interested in the railroad space are keenly awaiting first-quarter earnings reports from key players, such as CSX Corporation (CSX - Free Report) , Union Pacific Corporation (UNP - Free Report) and Canadian National Railway Company (CNI - Free Report) . While CSX and Union Pacific will release earnings numbers on Apr 22 and Apr 23, respectively, Canadian National will announce the same on Apr 27.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Image: Bigstock
Canadian Pacific (CP) Q1 Earnings Beat, 2020 View Bearish
Canadian Pacific Railway Limited’s (CP - Free Report) first-quarter 2020 earnings (excluding $1.08 from non-recurring items) of $3.3 (C$4.42) per share surpassed the Zacks Consensus Estimate of $2.86. Quarterly earnings also improved more than 55% year over year, primarily owing to low operating expenses.
Quarterly revenues of$1,523.3 million (C$2,043) surpassed the Zacks Consensus Estimate of $1,412.3 million. The top line also increased in double digits year over year owing to rise in freight revenues.
Freight revenues rose 15.9% year over year and contributed 97.9% to the top line. Notably, the company’s freight segment consists of Grain (up 10%), Coal (down 5.1%), Potash (down 1.7%), Fertilizers and sulfur (up 22.8%), Forest products (up 6.8%), Energy, chemicals and plastics (up 55.9%), Metals, minerals and consumer products (up 9.2%), Automotive (up 14.5%) and Intermodal (up 6.6%). 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 7% from the year-ago reported figure.
Operating income surged 53.6% in the quarter under review. Operating expenses dipped 1.2% year over year. Consequently, operating ratio (operating expenses as a percentage of revenues on an adjusted basis) improved to 59.2% in the first quarter from 69.3% in the year-ago period. Notably, lower value of this key metric bodes well. Capital spending during the first quarter was C$355 million.
Canadian Pacific Railway Limited Price, Consensus and EPS Surprise
Canadian Pacific Railway Limited price-consensus-eps-surprise-chart | Canadian Pacific Railway Limited Quote
Liquidity
The Zacks Rank #4 (Sell) company exited the first quarter with cash and cash equivalents of C$247 million compared with C$352 million at the end of the year-ago period. Long-term debt amounted to C$9,804 million compared with C$8,158 million at the end of December 2019.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
2020 Outlook Impacted by Coronavirus
With softness in demand due to coronavirus, the company now anticipates volumes, measured in revenue ton miles, to decline in mid-single digits in the current year (previously volumes were expected to rise in mid-single digits). Additionally, adjusted earnings per share are expected to be approximately flat year over year. Earlier, adjusted earnings per share were predicted to increase in the high single-digit to low double-digit range from C$16.44 reported in 2019. However, capital expenditures are still anticipated to be C$1.6 billion in 2020.
Upcoming Releases
Investors interested in the railroad space are keenly awaiting first-quarter earnings reports from key players, such as CSX Corporation (CSX - Free Report) , Union Pacific Corporation (UNP - Free Report) and Canadian National Railway Company (CNI - Free Report) . While CSX and Union Pacific will release earnings numbers on Apr 22 and Apr 23, respectively, Canadian National will announce the same on Apr 27.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>