Canadian Pacific's (CP) Q1 Earnings In Line, Sales Beat

Railroad operator, Canadian Pacific Railway Limited (NYSE:CP) reported in-line earnings but better-than-expected revenues in the first quarter of 2017. The company’s earnings (on an adjusted basis) of $1.90 per share (C$2.50) improved 4.4% from the year-ago figure.

Quarterly revenues improved 4.7% year over year to $1,214.4 million (C$1.6 billion), edging past the Zacks Consensus Estimate of $1,205.7 million. Freight revenues, which improved 3% year over year on a foreign exchange adjusted basis, accounted for the bulk (97.5%) of the top line.

Freight segment consists of Grain (up 9%), Coal (up 3%), Potash (up 23%), Sulfur and Fertilizer (down 25%), Forest products (down 3%), Energy, Chemicals and Plastics (down 11%), Metals, Minerals and Consumer products (up 32%), Automotive (down 14%) and Intermodal (up 5%). Total freight revenues per revenue ton-miles (RTMs) increased 4% on a foreign exchange adjusted basis in the reported quarter. Additionally, the foreign exchange adjusted increase in freight revenues per car load was 1%.

Operating income (on an adjusted basis) decreased 5% in the first quarter. Operating ratio (operating expenses as a percentage of revenues on an adjusted basis) came in at 61.3% as against 58.9% a year ago. This Zacks Rank # 3 (Hold) company still expects earnings per share to grow in high-single digits in 2017. An expected increase in volumes as well as cost-control efforts should drive the upside. Also, improvement in operating ratio is anticipated in 2017.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Canadian Pacific Railway Limited Price, Consensus and EPS Surprise

Canadian Pacific Railway Limited Price, Consensus and EPS Surprise | Canadian Pacific Railway Limited Quote

Liquidity

Canadian Pacific exited the first quarter with cash and cash equivalents of C$201 million as against C$164 million at the end of 2016. Long-term debt totaled C$8,583 million compared with C$8,659 million at the end of 2016.

Upcoming Releases

Investors interested in the railroad space are also keenly waiting for first-quarter earnings reports from key players like Union Pacific Corporation (NYSE:UNP) , Kansas City Southern (NYSE:KSU) and Canadian National Railway Company (NYSE:CNI) in the coming days. Union Pacific is scheduled to report on Apr 27, while Kansas City Southern and Canadian National will report on Apr 21 and Apr 24, respectively.

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