Canadian Pacific's (CP) Q3 Earnings In Line, Revenues Miss

Canadian Pacific Railway Limited (NYSE:CP) reported in-line earnings and lower-than-expected revenues in third-quarter 2017. The company’s earnings (excluding 48 cents from non-recurring items) of $2.31 per share (C$2.90) were in line with the Zacks Consensus Estimate. However, earnings improved 10.5% from the year-ago figure.

Quarterly revenues increased 6.7% year over year to $1,272 million (C$1,595 million) but fell short of the Zacks Consensus Estimate of $1300.6 million. Freight revenues, which improved 2.5% year over year, accounted for bulk (97%) of the top line.

The company's freight segment consists of Grain (down 6%), Coal (up 3%), Potash (up 27%), Sulfur and Fertilizer (down 19%), Forest products (down 6%), Energy, Chemicals and Plastics (up 11%), Metals, Minerals and Consumer products (up 35%), Automotive (down 21%) and Intermodal (down 2%). Total freight revenues per revenue ton miles (RTMs) slipped 1% year over year in the reported quarter. Additionally, freight revenues per car load decreased 7% in the quarter.

Operating income (on an adjusted basis) climbed 5% in the third quarter. Operating ratio (operating expenses as a percentage of revenues on an adjusted basis) came in at 56.7% compared with 57.7% a year ago.

With increased volumes, the company raised guidance for full-year 2017. Canadian Pacific now expects a double-digit rise in adjusted earnings per share for 2017 compared with C$10.29 in 2016.

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 #3 (Hold) company exited the third quarter with cash and cash equivalents of C$142 million compared with C$164 million at the end of 2016. Long-term debt totaled C$7,384 million compared with C$8,659 million in December 2016. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Releases

Investors interested in the railroad space are keenly awaiting third-quarter earnings reports from key players like Canadian National Railway Company (NYSE:CNI) , Kansas City Southern (NYSE:KSU) and Norfolk Southern Corporation (NYSE:NSC) . While Canadian National is scheduled to report third-quarter results on Oct 24, Kansas City Southern and Norfolk Southern will report on Oct 20 and Oct 25, respectively.

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