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Canadian Pacific (CP) Q4 Earnings Meet Estimates, Rise Y/Y
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Canadian Pacific Railway Limited’s (CP - Free Report) fourth-quarter 2020 earnings (excluding 68 cents from non-recurring items) of $3.88 (C$5.06) per share were in line with the Zacks Consensus Estimate. Quarterly earnings increased 7.5% on a year-over-year basis.
However, quarterly revenues of $1,543.1 million (C$2,012 million) lagged the Zacks Consensus Estimate of $1,629.1 million. The top line dropped 1.6% year over year due to decline in freight revenues amid coronavirus-related woes.
Freight revenues, contributing 97.8% to the top line, fell 3% on a year-over-year basis. The company’s freight segment consists of Grain (up 7%), Coal (down 8%), Potash (up 8%), Fertilizers and sulphur (up 22%), Forest products (up 12%), Energy, chemicals and plastics (down 25%), Metals, minerals and consumer products (down 10%), Automotive (up 28%) as well as Intermodal (up 3%). In the reported quarter, total freight revenues per revenue ton-miles (RTMs) were down 5% year over year. Also, total freight revenues per carload plunged 6% from the year-ago quarter’s reported figure.
Operating income increased 4%, while operating expenses fell 8% year over year in the quarter under review. Moreover, operating ratio (operating expenses as a percentage of revenues on an adjusted basis) improved to 53.9% in the fourth quarter from 57% in the year-ago quarter. The upside can be attributed to the reduction in operating expenses. Notably, lower value of this key metric bodes well.
Canadian Pacific Railway Limited Price, Consensus and EPS Surprise
The Zacks Rank #3 (Hold) company exited the fourth quarter with cash and cash equivalents of C$147 million compared with C$133 million at the end of December 2019. Long-term debt amounted to C$8,585 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.
New Repurchase Plan & Five-for-one Stock Split Update
In a shareholder-friendly move, Canadian Pacific’s board of directors announced a new 2.5% buyback program. In a bid to enhance liquidity in the shares and provide better access to ownership for a wide range of investors, the railroad announced the proposal for a five-for-one share split of its issued and outstanding common shares. The proposal will be presented by the board of directors for approval of its shareholders. Approval will be sought at the Annual and Special Meeting of Shareholders scheduled to be held on Apr 21, 2021.
2021 Outlook
With volumes gradually improving, Canadian Pacific anticipates revenue ton-miles to increase at high-single digit. Additionally, adjusted earnings per share are estimated to increase at double-digit for the current year from the C$17.67 recorded in 2020. Effective tax rate is estimated to be approximately 24.6% in the current year.
Sectorial Snapshots
Let’s take a look at some of the other recently released earnings reports from companies within the Zacks Transportation sector.
United Airlines (UAL - Free Report) incurred a loss (excluding 6 cents from non-recurring items) of $7 per share in the fourth quarter of 2020, wider than the Zacks Consensus Estimate of a loss of $6.56. Further, operating revenues of $3,412 million lagged the Zacks Consensus Estimate of $3,420.4 million.
J.B. Hunt Transport Services (JBHT - Free Report) reported earnings of $1.44 per share, beating the Zacks Consensus Estimate of $1.27. Total operating revenues of $2,737.7 million also surpassed the Zacks Consensus Estimate of $2,514.3 million.
Delta Air Lines (DAL - Free Report) incurred a loss (excluding $1.34 from non-recurring items) of $2.53 per share in the fourth quarter of 2020, wider than the Zacks Consensus Estimate of a loss of $2.43. Total revenues of $3,973 million topped the Zacks Consensus Estimate of $3,754.5 million.
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Canadian Pacific (CP) Q4 Earnings Meet Estimates, Rise Y/Y
Canadian Pacific Railway Limited’s (CP - Free Report) fourth-quarter 2020 earnings (excluding 68 cents from non-recurring items) of $3.88 (C$5.06) per share were in line with the Zacks Consensus Estimate. Quarterly earnings increased 7.5% on a year-over-year basis.
However, quarterly revenues of $1,543.1 million (C$2,012 million) lagged the Zacks Consensus Estimate of $1,629.1 million. The top line dropped 1.6% year over year due to decline in freight revenues amid coronavirus-related woes.
Freight revenues, contributing 97.8% to the top line, fell 3% on a year-over-year basis. The company’s freight segment consists of Grain (up 7%), Coal (down 8%), Potash (up 8%), Fertilizers and sulphur (up 22%), Forest products (up 12%), Energy, chemicals and plastics (down 25%), Metals, minerals and consumer products (down 10%), Automotive (up 28%) as well as Intermodal (up 3%). In the reported quarter, total freight revenues per revenue ton-miles (RTMs) were down 5% year over year. Also, total freight revenues per carload plunged 6% from the year-ago quarter’s reported figure.
Operating income increased 4%, while operating expenses fell 8% year over year in the quarter under review. Moreover, operating ratio (operating expenses as a percentage of revenues on an adjusted basis) improved to 53.9% in the fourth quarter from 57% in the year-ago quarter. The upside can be attributed to the reduction in operating expenses. Notably, lower value of this key metric bodes well.
Canadian Pacific Railway Limited Price, Consensus and EPS Surprise
Canadian Pacific Railway Limited price-consensus-eps-surprise-chart | Canadian Pacific Railway Limited Quote
Liquidity
The Zacks Rank #3 (Hold) company exited the fourth quarter with cash and cash equivalents of C$147 million compared with C$133 million at the end of December 2019. Long-term debt amounted to C$8,585 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.
New Repurchase Plan & Five-for-one Stock Split Update
In a shareholder-friendly move, Canadian Pacific’s board of directors announced a new 2.5% buyback program. In a bid to enhance liquidity in the shares and provide better access to ownership for a wide range of investors, the railroad announced the proposal for a five-for-one share split of its issued and outstanding common shares. The proposal will be presented by the board of directors for approval of its shareholders. Approval will be sought at the Annual and Special Meeting of Shareholders scheduled to be held on Apr 21, 2021.
2021 Outlook
With volumes gradually improving, Canadian Pacific anticipates revenue ton-miles to increase at high-single digit. Additionally, adjusted earnings per share are estimated to increase at double-digit for the current year from the C$17.67 recorded in 2020. Effective tax rate is estimated to be approximately 24.6% in the current year.
Sectorial Snapshots
Let’s take a look at some of the other recently released earnings reports from companies within the Zacks Transportation sector.
United Airlines (UAL - Free Report) incurred a loss (excluding 6 cents from non-recurring items) of $7 per share in the fourth quarter of 2020, wider than the Zacks Consensus Estimate of a loss of $6.56. Further, operating revenues of $3,412 million lagged the Zacks Consensus Estimate of $3,420.4 million.
J.B. Hunt Transport Services (JBHT - Free Report) reported earnings of $1.44 per share, beating the Zacks Consensus Estimate of $1.27. Total operating revenues of $2,737.7 million also surpassed the Zacks Consensus Estimate of $2,514.3 million.
Delta Air Lines (DAL - Free Report) incurred a loss (excluding $1.34 from non-recurring items) of $2.53 per share in the fourth quarter of 2020, wider than the Zacks Consensus Estimate of a loss of $2.43. Total revenues of $3,973 million topped the Zacks Consensus Estimate of $3,754.5 million.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by referendums and legislation, this industry is expected to blast from an already robust $17.7 billion in 2019 to a staggering $73.6 billion by 2027. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot stocks we're targeting >>