After market close today, Canadian Pacific Railway (TSE: CP) (NYSE: CP) reported its Q3-2022 financial results, which beat revenue expectations and matched earnings-per-share (EPS) expectations.
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CP’s revenue reached C$2.31 billion compared to the consensus estimate of about C$2.27 billion, representing a 19% growth rate. Canadian National Railway (TSE: CNR) (NYSE: CNI), CP’s competitor, also reported a solid growth rate of 26% just yesterday, which was attributed to rising fuel surcharge revenue and FX tailwinds from a weakening Canadian dollar. Perhaps CP experienced the same tailwinds as CNR, but the company thanked the strong demand in potash and intermodal for its solid results.
CP’s core adjusted diluted earnings per share were C$1.01, up 15% year-over-year, in line with analysts’ expectations.
Its FRA-reportable train accident frequency also fell by 76%, hitting a record low 0.37, while FRA-reportable personal injury frequency declined by 12% to 0.86.
Additionally, CP’s cash from operations reached C$1.1 billion for the quarter, growing by 101%. Further, CP’s operating ratio improved, as it fell to 58.7% from 59.4% last year (the lower, the better).
Canadian Pacific’s CEO stated, “We are well-positioned to carry the momentum we gained in the third quarter through the rest of the year and beyond.”
Is CP Stock a Buy, According to Analysts?
Turning to Wall Street, Canadian Pacific Rail stock comes in as a Moderate Buy. That’s based on nine Buys and four Holds assigned in the past three months. The average CP stock price target of C$106.54 implies 7.3% upside potential.
Conclusion: CP’s Q3-2022 Results Were Solid
Canadian Pacific’s Q3-2022 results beat on revenue and matched EPS expectations. Overall, that’s a pretty solid result, especially with revenue growth of 19%. However, its profit margins dropped as earnings increased by a smaller amount than revenues, so that’s something to consider. Nonetheless, the company should continue seeing strong results for the rest of the year.
