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Canadian Pacific Kansas City
(TSX:CP)
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Rating:71Outperform
Price Target:
C$136.00
â–²(4.19% Upside)
Action:Reiterated
Date:07/31/26
The score is driven primarily by solid financial performance (strong margins and a stable, appropriately levered balance sheet), supported by a constructive earnings outlook and improving cash generation highlighted on the latest call. Offsetting factors are mixed cash-flow conversion, a somewhat expensive valuation (P/E ~26.5 with a low yield), and weaker near-term technicals with the stock below its 20- and 50-day moving averages.
Positive Factors
Strong profitability
Sustained high margins indicate durable operating leverage and pricing power across bulk and intermodal freight. Consistently strong gross and net margins provide a structural buffer to absorb cost shocks and support reinvestment, dividends, and buybacks over multiple cycles.
Negative Factors
Coal volume weakness
Significant declines in coal volumes materially subtract from RTMs and revenue mix; if structural or prolonged, this commodity-specific deterioration can reduce network density and undercut longer-term volume baselines, increasing earnings cyclicality.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong profitability
Sustained high margins indicate durable operating leverage and pricing power across bulk and intermodal freight. Consistently strong gross and net margins provide a structural buffer to absorb cost shocks and support reinvestment, dividends, and buybacks over multiple cycles.
Read all positive factors
Canadian Pacific Kansas City (CP) vs. iShares MSCI Canada ETF (EWC)
Market Cap
C$111.44B
Dividend Yield0.75%
Average Volume (3M)1.13M
Price to Earnings (P/E)26.9
Beta (1Y)0.67
Revenue Growth3.57%
EPS Growth-4.13%
CountryCA
Employees19,687
SectorIndustrials
Sector Strength72
IndustryRailroads
Share Statistics
EPS (TTM)4.71
Shares Outstanding879,079,200
10 Day Avg. Volume1,066,381
30 Day Avg. Volume1,125,556
Financial Highlights & Ratios
PEG Ratio1.65
Price to Book (P/B)2.02
Price to Sales (P/S)6.14
P/FCF Ratio42.68
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$137.95Price Target Upside5.68% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering18
EPS Forecast (FY)5.18
Revenue Forecast (FY)C$16.38B
Canadian Pacific Kansas City Business Overview & Revenue Model
Company Description
Canadian Pacific Kansas City Ltd. provides essential rail freight transportation services. The firm operates an extensive railway network, creating vital connections between Canada, the United States, and Mexico. Established on June 22, 2001, the ...
How the Company Makes Money
CPKC primarily makes money by charging customers for freight transportation services on its rail network. Revenue is generated from moving carload and intermodal shipments across multiple commodity groups (e.g., bulk commodities, industrial produc...
Canadian Pacific Kansas City Earnings Call Summary
Earnings Call Date:Jul 29, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Oct 28, 2026
Earnings Call Sentiment Positive
The call conveyed a largely positive operational and financial picture: robust revenue and volume growth, record operating productivity, strong cash flow, active capital returns, and an expanding commercial pipeline. Material near-term headwinds were acknowledged — notably a significant decline in coal volumes, substantially higher fuel expense with timing impacts on margins, recent safety metric deterioration, and elevated casualty/compensation costs. Management emphasized that underlying momentum, fleet modernization and synergy realization position the company well for continued earnings and volume growth.Positive Updates
Top-line and volume growth
Quarterly volume growth of 4% and revenue growth of 13% (freight revenue excluding fuel up 13%); GTMs (gross ton-miles) up 4% and cents per RTM increased 9%.
Negative Updates
Coal business decline
Coal revenue declined 18% on a 29% reduction in volumes in the quarter, which reduced total RTM growth by approximately 3 percentage points; decline driven by production-related challenges at customer mines and expected to remain a headwind into the second half.
Read all updates
Q2-2026 Updates
Positive
Negative
Top-line and volume growth
Quarterly volume growth of 4% and revenue growth of 13% (freight revenue excluding fuel up 13%); GTMs (gross ton-miles) up 4% and cents per RTM increased 9%.
Read all positive updates
Company Guidance
CPKC reiterated 2026 guidance calling for mid‑single‑digit volume growth and another year of double‑digit earnings growth, with management expecting sequential improvement in cents/RTM and materially stronger volumes in H2; full‑year CapEx remains $2.65B (15% reduction Y/Y) with YTD CapEx $1.4B, YTD net cash from operations +8% and YTD adjusted free cash $1.3B (+25% Y/Y), and the company returned $2.4B to shareholders in H1. Q2 reported operating ratio was 54.6% (core adjusted OR 61.6%, +90 bps), core adjusted diluted EPS $1.20 (+13% YoY; GAAP diluted EPS $1.15), net interest expense $237M ($231M ex purchase accounting) and a full‑year core adjusted effective tax rate of ~24.75%. Operational/cost dynamics to watch: fuel expense +49% (on‑highway diesel +52%) partially offset by a 4% fuel‑efficiency gain; rail/tie installation productivity +18%/+59%; all 70 Wabtec locomotives for 2026 delivered with Progress Rail units starting in H2; headcount is ~500 below prior year but modest hiring is planned to support growth, and management expects to be off the mainline in Western Canada before fall harvest.Canadian Pacific Kansas City Financial Statement Overview
Summary
Income Statement
84
Very Positive
Balance Sheet
77
Positive
Cash Flow
73
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 16.89B | 15.08B | 14.55B | 12.55B | 8.81B | 8.00B |
| Gross Profit | 8.06B | 6.08B | 7.54B | 6.44B | 4.59B | 4.59B |
| EBITDA | 8.89B | 8.37B | 7.47B | -739.00M | 5.65B | 4.87B |
| Net Income | 4.23B | 4.14B | 3.72B | 3.93B | 3.52B | 2.85B |
Balance Sheet | ||||||
| Total Assets | 89.28B | 85.94B | 88.40B | 80.39B | 73.75B | 68.35B |
| Cash, Cash Equivalents and Short-Term Investments | 366.00M | 184.00M | 739.00M | 464.00M | 451.00M | 82.00M |
| Total Debt | 25.15B | 23.19B | 22.99B | 22.84B | 19.92B | 20.41B |
| Total Liabilities | 41.67B | 39.12B | 39.51B | 37.98B | 34.86B | 34.52B |
| Stockholders Equity | 46.63B | 45.88B | 47.89B | 41.49B | 38.89B | 33.83B |
Cash Flow | ||||||
| Free Cash Flow | 2.56B | 2.17B | 2.41B | 1.64B | 2.58B | 2.16B |
| Operating Cash Flow | 6.00B | 5.31B | 5.27B | 4.14B | 4.14B | 3.69B |
| Investing Cash Flow | -3.43B | -2.67B | -2.80B | -2.16B | -1.50B | -13.73B |
| Financing Cash Flow | -3.18B | -3.15B | -2.25B | -1.96B | -2.30B | 9.94B |
Canadian Pacific Kansas City Technical Analysis
Neutral
130.53
Price Trends
127.92
Negative
123.61
Positive
114.85
Positive
Market Momentum
-0.44
Positive
46.10
Neutral
26.67
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:CP, the sentiment is Neutral. The current price of 130.53 is above the 20-day moving average (MA) of 129.06, above the 50-day MA of 127.92, and above the 200-day MA of 114.85, indicating a neutral trend. The MACD of -0.44 indicates Positive momentum. The RSI at 46.10 is Neutral, neither overbought nor oversold. The STOCH value of 26.67 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for TSE:CP.
Canadian Pacific Kansas City Risk Analysis
Canadian Pacific Kansas City disclosed 25 risk factors in its most recent earnings report. Canadian Pacific Kansas City reported the most risks in the "Legal & Regulatory" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Canadian Pacific Kansas City Peers Comparison
UnderperformOutperform
Sector (63)
TSE:CP
Canadian Pacific Kansas City
126.77
22.57
21.66%
TSE:CNR
Canadian National Railway
170.58
41.39
32.04%
Canadian Pacific Kansas City Corporate Events
Business Operations and StrategyDividends
CPKC Declares Quarterly Dividend of $0.268 Per Share
Positive
Jul 29, 2026
Canadian Pacific Kansas City Limited has declared a quarterly dividend of $0.268 per common share, underscoring its ongoing commitment to returning capital to shareholders. The dividend will be paid on October 26, 2026, to shareholders of record a...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.