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Canadian Pacific (CP) Q2 Earnings Beat Estimates, Down Y/Y
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Canadian Pacific Railway Limited’s (CP - Free Report) second-quarter 2020 earnings (excluding 42 cents from non-recurring items) of $2.94 (C$4.66) per share surpassed the Zacks Consensus Estimate of $2.75. However, quarterly earnings declined 8.4% year over year.
Quarterly revenues of$1,292.8 million (C$1,792) missed the Zacks Consensus Estimate of $1,299.9 million. The top line also fell 12.5% on a year-over-year basis due to drop in freight revenues.
Freight revenues, contributing 97.8% of the top line, fell 9.3% on a year-over-year basis. Notably, the company’s freight segment consists of Grain (up 5.7%), Coal (down 24.3%), Potash (up 7.4%), Fertilizers and sulphur (up 22.2%), Forest products (up 3.8%), Energy, chemicals and plastics (down 1.4%), Metals, minerals and consumer products (down 35.1%), Automotive (down 67.3%) and Intermodal (down 10.1%). In the reported quarter, total freight revenues per revenue ton-miles (RTMs) were up 1% year over year. Also, total freight revenues per carload climbed 3.1% from the year-ago quarter’s reported figure.
Operating income declined 6.3% in the quarter under review. Operating expenses fell 11.5% year over year. Consequently, operating ratio (operating expenses as a percentage of revenues on an adjusted basis) improved to 57% in the second quarter from 58.4% in the year-ago quarter. Notably, lower value of this key metric bodes well. Increased efficiencies owing to the precision scheduled railroading model adopted by Canadian Pacific drove the metric.
Liquidity
The Zacks Rank #1 (Strong Buy) company exited the second quarter with cash and cash equivalents of C$277 million compared with C$133 million at the end of the year-ago quarter. Long-term debt amounted to C$9,457 million compared with C$8,158 million at the end of December 2019. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
2020 Outlook
Based on the strength of the company’s performance amid softness in demand due to coronavirus, the company now anticipates adjusted earnings per share to grow on a year-over-year basis relative to 2019’s adjusted EPS of $16.44. However, capital expenditures are still anticipated to be C$1.6 billion in 2020. Moreover, revenue ton miles are estimated to decline in mid-single digit. Effective tax rate is anticipated to be approximately at 24.8% compared to 25% previously.
Canadian Pacific Railway Limited Price, Consensus and EPS Surprise
Apart from Canadian Pacific, let’s take a look into some other Zacks Transportation sector’s second-quarter earnings like Canadian National Railway Company’s (CNI - Free Report) , Kansas City Southern and J.B. Hunt Transport Services (JBHT - Free Report) .
Canadian National second-quarter 2020 earnings (excluding 36 cents from non-recurring items) of 92 cents per share (C$0.77) met the Zacks Consensus Estimate. However, the bottom line declined 28.7% year over year. Quarterly revenues of $2,315 million (C$3,209 million) missed the Zacks Consensus Estimate of $2,407.6 million and declined 21.8% year over year.
J.B. Hunt, carrying a Zacks Rank #3 (Hold), reported second-quarter earnings of $1.14 per share that surpassed the Zacks Consensus Estimate by 31 cents. Total revenues of $2,145.6 million also beat the Zacks Consensus Estimate of $2,060.9 million.
Kansas City Southern’s second-quarter earnings (excluding a penny from non-recurring items) of $1.15 per share beat the Zacks Consensus Estimate of $1.12. This Zacks Rank #3 (Hold) company’s total revenues of $547.9 million lagged the Zacks Consensus Estimate of $550.2 million.
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Canadian Pacific (CP) Q2 Earnings Beat Estimates, Down Y/Y
Canadian Pacific Railway Limited’s (CP - Free Report) second-quarter 2020 earnings (excluding 42 cents from non-recurring items) of $2.94 (C$4.66) per share surpassed the Zacks Consensus Estimate of $2.75. However, quarterly earnings declined 8.4% year over year.
Quarterly revenues of$1,292.8 million (C$1,792) missed the Zacks Consensus Estimate of $1,299.9 million. The top line also fell 12.5% on a year-over-year basis due to drop in freight revenues.
Freight revenues, contributing 97.8% of the top line, fell 9.3% on a year-over-year basis. Notably, the company’s freight segment consists of Grain (up 5.7%), Coal (down 24.3%), Potash (up 7.4%), Fertilizers and sulphur (up 22.2%), Forest products (up 3.8%), Energy, chemicals and plastics (down 1.4%), Metals, minerals and consumer products (down 35.1%), Automotive (down 67.3%) and Intermodal (down 10.1%). In the reported quarter, total freight revenues per revenue ton-miles (RTMs) were up 1% year over year. Also, total freight revenues per carload climbed 3.1% from the year-ago quarter’s reported figure.
Operating income declined 6.3% in the quarter under review. Operating expenses fell 11.5% year over year. Consequently, operating ratio (operating expenses as a percentage of revenues on an adjusted basis) improved to 57% in the second quarter from 58.4% in the year-ago quarter. Notably, lower value of this key metric bodes well. Increased efficiencies owing to the precision scheduled railroading model adopted by Canadian Pacific drove the metric.
Liquidity
The Zacks Rank #1 (Strong Buy) company exited the second quarter with cash and cash equivalents of C$277 million compared with C$133 million at the end of the year-ago quarter. Long-term debt amounted to C$9,457 million compared with C$8,158 million at the end of December 2019.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
2020 Outlook
Based on the strength of the company’s performance amid softness in demand due to coronavirus, the company now anticipates adjusted earnings per share to grow on a year-over-year basis relative to 2019’s adjusted EPS of $16.44. However, capital expenditures are still anticipated to be C$1.6 billion in 2020. Moreover, revenue ton miles are estimated to decline in mid-single digit. Effective tax rate is anticipated to be approximately at 24.8% compared to 25% previously.
Canadian Pacific Railway Limited Price, Consensus and EPS Surprise
Canadian Pacific Railway Limited price-consensus-eps-surprise-chart | Canadian Pacific Railway Limited Quote
Sectorial Snapshot
Apart from Canadian Pacific, let’s take a look into some other Zacks Transportation sector’s second-quarter earnings like Canadian National Railway Company’s (CNI - Free Report) , Kansas City Southern and J.B. Hunt Transport Services (JBHT - Free Report) .
Canadian National second-quarter 2020 earnings (excluding 36 cents from non-recurring items) of 92 cents per share (C$0.77) met the Zacks Consensus Estimate. However, the bottom line declined 28.7% year over year. Quarterly revenues of $2,315 million (C$3,209 million) missed the Zacks Consensus Estimate of $2,407.6 million and declined 21.8% year over year.
J.B. Hunt, carrying a Zacks Rank #3 (Hold), reported second-quarter earnings of $1.14 per share that surpassed the Zacks Consensus Estimate by 31 cents. Total revenues of $2,145.6 million also beat the Zacks Consensus Estimate of $2,060.9 million.
Kansas City Southern’s second-quarter earnings (excluding a penny from non-recurring items) of $1.15 per share beat the Zacks Consensus Estimate of $1.12. This Zacks Rank #3 (Hold) company’s total revenues of $547.9 million lagged the Zacks Consensus Estimate of $550.2 million.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>