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What's in Store for Canadian Pacific (CP) in Q4 Earnings?

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Canadian Pacific Railway Limited (CP - Free Report) is scheduled to report fourth-quarter 2023 results on Jan 30, after market close.

The company has a disappointing earnings history, having underperformed the Zacks Consensus Estimate in two of the last four quarters and beat twice. CP has a trailing four-quarter negative earnings surprise of 4.04%, on average.

Let’s see how things might have shaped up for Canadian Pacific this reporting cycle.

Factors to Note

The railroad operator’s total operating expenses are likely to have increased in the fourth quarter primarily due to higher fuel costs. This is likely to have hurt the bottom line. Our estimate for total expense has increased 45.3% year over year. The Zacks Consensus Estimate for quarterly earnings is pegged at 83 cents per share, implying a 2.47% increase from the fourth-quarter 2022 actuals.

Canadian Pacific’s high capital expenditures are also expected to have hurt the bottom line in the to-be-reported quarter.  

Despite such a backdrop, gradual recovery in freight-market conditions is likely to have boosted the company’s December-quarter performance. Our estimate for freight revenues has jumped 47.8% year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $2.71 billion, implying a 49.6% improvement from the fourth-quarter 2022 actuals.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for ODFL this time around. The combination of a positive Earnings ESP  and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here. You can uncover the best stocks to buy or sell before they're reported with our  Earnings ESP Filter.

Canadian Pacific has an Earnings ESP of -2.48% and a Zacks Rank #3 at present.

Highlights of Q3 Earnings

Canadian Pacific reported third-quarter 2023 earnings (excluding 6 cents from non-recurring items) per share of 69 cents (C$0.84), which beat the Zacks Consensus Estimate of 68 cents. Nonetheless, the bottom line decreased 10.4% year over year. However, quarterly revenues of $2,489.1 million (C$3,339 million) surpassed the Zacks Consensus Estimate of $2,487.4 million and improved 40.4% year over year.

Stocks to Consider

Here are a few stocks from the broader Zacks Transportation sector that investors may consider, as our model shows that these have the right combination of elements to beat on earnings this reporting cycle.

Allegiant Travel Company (ALGT - Free Report) has an Earnings ESP of +80.07% and a Zacks Rank #3 at present. ALGT is set to release results on Feb 5.

The company has an impressive earnings surprise history. Its earnings beat the Zacks Consensus Estimate in three of the preceding four quarters and missed once, the average beat being 80.8%.

Westinghouse Air Brake Technologies Corporation, operating as Wabtec Corporation (WAB - Free Report) , has an Earnings ESP of +0.85% and a Zacks Rank #1 at present. WAB is set to release results on Feb 14. You can see the complete list of today’s Zacks #1 Rank stocks here.

WAB has an expected earnings growth rate of 20.77% for fourth-quarter 2023. WAB delivered a trailing four-quarter earnings surprise of 7.11%, on average. The Zacks Consensus Estimate for WAB’s fourth-quarter 2023 earnings has improved 3.3% over the past 90 days.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
 

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