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Canadian Pacific (CP) Stock Jumps 3.5%: Will It Continue to Soar?

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Canadian Pacific (CP - Free Report) shares rallied 3.5% in the last trading session to close at $367.56. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 0.3% gain over the past four weeks.

The stock extended its rally following the first-quarter 2021 earnings release on Apr 21. The company’s earnings (excluding a penny from non-recurring items) of $3.54 (C$4.48) per share surpassed the Zacks Consensus Estimate of $3.47. Quarterly earnings increased 7.3% on a year-over-year basis due to low costs. The company also provided an upbeat guidance for 2021. Canadian Pacific anticipates adjusted earnings per share to increase in double-digits in 2021 compared with C$17.67 reported in 2020. Additionally, volumes, measured in RTMs (revenue ton-miles), are expected to grow in high single digits.

Price and Consensus

Price Consensus Chart for CP

This railroad is expected to post quarterly earnings of $3.99 per share in its upcoming report, which represents a year-over-year change of +35.7%. Revenues are expected to be $1.63 billion, up 26.3% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Canadian Pacific, the consensus EPS estimate for the quarter has been revised marginally higher over the last 30 days to the current level. And a positive trend in earnings estimate revision usually translates into price appreciation. So, make sure to keep an eye on CP going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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