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Canadian Pacific (CP) Q3 Earnings: A Beat in the Cards?


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Calgary, Canada-basedrailroad operator, Canadian Pacific Railway Limited (CP - Analyst Report) is scheduled to report third-quarter 2016 results on Oct 19, before the opening bell.

Last quarter, the company posted a positive earnings surprise of 1.92%. Moreover, the company has beat estimates in three of the last four quarters with the average earnings surprise at 0.96%. Let’s see how things are shaping up for this announcement.

Factors at Play this Quarter

Canadian Pacific’s third-quarter results are expected to be benefited by higher grain exports than the previous quarter. Also, the company’s shareholder returns policy continues to impress. Although Canadian Pacific has recently seen some changes in management and its board of directors, we expect the company to gain from the experience and expertise of the new members.

However, company’s top-line growth continues to be hurt by low coal exports volume. Coal and weak energy markets have been a major concern for leading railroads like Union Pacific Corp. (UNP - Analyst Report) and Kansas City Southern (KSU - Analyst Report) . Another concern for Canadian Pacific is a strong U.S. dollar, which can adversely impact earnings.

Earnings Whispers

Our proven model shows that Canadian Pacific is likely to beat expectations this quarter because it has the right combination of two key ingredients.

Zacks ESP: Canadian Pacific has an Earnings ESP  of +0.47%. This is because the Most Accurate estimate stands at $2.13 and Zacks Consensus Estimate is pegged at $2.12.

Zacks Rank: Canadian Pacific carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank of #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating on earnings.

Please note, we caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

CDN PAC RLWY Price and EPS Surprise

CDN PAC RLWY Price and EPS Surprise | CDN PAC RLWY Quote

Stocks to Consider

Here is a stock you may want to consider as our model shows it has the right combination of elements to post an earnings beat this quarter.

Student Transportation Inc. (STB - Snapshot Report) has an Earnings ESP of over +11.11% and a Zacks Rank #2. The company is expected to report third-quarter earnings on Nov 3.You can see the complete list of today’s Zacks #1 Rank stocks here.

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