Railroad operator Canadian Pacific Railway Limited (CP - Free Report) reported mixed results in the second quarter of 2016, with earnings beating the consensus estimate and revenues missing the same. The company’s earnings (on an adjusted basis) of C$2.05 per share (approximately $1.59 per share) beat the Zacks Consensus Estimate by 3 cents. The beat can be attributed to lower costs. Earnings however deteriorated from the year-ago figure of $1.99 per share.
Quarterly revenues declined year over year to $1,125 million and also missed the Zacks Consensus Estimate of $1,136 million. The top line was hurt by a decline in freight revenues. Soft freight revenues primarily from coal, Canadian grain and potash hurt the results. Apart from soft commodity volumes, a stronger Canadian dollar also hurt the top line.
Operating expenses contracted significantly on the back of low fuel costs. Operating ratio (defined as operating expenses as a percentage of revenues) came in at 62% in the reported quarter compared with 60.9% a year ago. The company’s net income (on an adjusted basis) declined 23% to $312 million in the quarter.
Liquidity
Canadian Pacific exited the second quarter with cash and cash equivalents of C$92 million compared with C$650 million at the end of 2015.
Long-term debt totaled C$8,430 million compared with C$8,927 million at the end of 2015. We note that Canadian Pacific had scrapped its plans to buy peer Norfolk Southern Corp. (NSC - Free Report) earlier in the year. The cash, which was to be utilized for the Norfolk Southern takeover, has been used to fund shareholder friendly activities such as buybacks/dividends. Consequently, during the quarter the company announced an increased dividend of C$0.50 per share.
Another Notable Release
Railroad operator Union Pacific Corp. (UNP - Free Report) is slated to release its second-quarter results on Jul 21.
Zacks Rank & A Key Pick
Currently, Canadian Pacific carries a Zacks Rank #3 (Hold). A better-ranked stock in the broader transportation space is United Parcel Services Inc. (UPS - Free Report) , carrying a Zacks Rank #2 (Buy).
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Railroad operator Canadian Pacific Railway Limited (CP - Free Report) reported mixed results in the second quarter of 2016, with earnings beating the consensus estimate and revenues missing the same. The company’s earnings (on an adjusted basis) of C$2.05 per share (approximately $1.59 per share) beat the Zacks Consensus Estimate by 3 cents. The beat can be attributed to lower costs. Earnings however deteriorated from the year-ago figure of $1.99 per share.
Quarterly revenues declined year over year to $1,125 million and also missed the Zacks Consensus Estimate of $1,136 million. The top line was hurt by a decline in freight revenues. Soft freight revenues primarily from coal, Canadian grain and potash hurt the results. Apart from soft commodity volumes, a stronger Canadian dollar also hurt the top line.
Operating expenses contracted significantly on the back of low fuel costs. Operating ratio (defined as operating expenses as a percentage of revenues) came in at 62% in the reported quarter compared with 60.9% a year ago. The company’s net income (on an adjusted basis) declined 23% to $312 million in the quarter.
Liquidity
Canadian Pacific exited the second quarter with cash and cash equivalents of C$92 million compared with C$650 million at the end of 2015.
Long-term debt totaled C$8,430 million compared with C$8,927 million at the end of 2015. We note that Canadian Pacific had scrapped its plans to buy peer Norfolk Southern Corp. (NSC - Free Report) earlier in the year. The cash, which was to be utilized for the Norfolk Southern takeover, has been used to fund shareholder friendly activities such as buybacks/dividends. Consequently, during the quarter the company announced an increased dividend of C$0.50 per share.
Another Notable Release
Railroad operator Union Pacific Corp. (UNP - Free Report) is slated to release its second-quarter results on Jul 21.
Zacks Rank & A Key Pick
Currently, Canadian Pacific carries a Zacks Rank #3 (Hold). A better-ranked stock in the broader transportation space is United Parcel Services Inc. (UPS - Free Report) , carrying a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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