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Canadian Pacific's (CP) Q1 Earnings in Line, Sales Beat

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Railroad operator, Canadian Pacific Railway Limited (CP - Free Report) reported in-line earnings but better-than-expected revenues in the first quarter of 2017. The company’s earnings (on an adjusted basis) of $1.90 per share (C$2.50) improved 4.4% from the year-ago figure.

Quarterly revenues improved 4.7% year over year to $1,214.4 million (C$1.6 billion), edging past the Zacks Consensus Estimate of $1,205.7 million. Freight revenues, which improved 3% year over year on a foreign exchange adjusted basis, accounted for the bulk (97.5%) of the top line.

Freight segment consists of Grain (up 9%), Coal (up 3%), Potash (up 23%), Sulfur and Fertilizer (down 25%), Forest products (down 3%), Energy, Chemicals and Plastics (down 11%), Metals, Minerals and Consumer products (up 32%), Automotive (down 14%) and Intermodal (up 5%). Total freight revenues per revenue ton-miles (RTMs) increased 4% on a foreign exchange adjusted basis in the reported quarter. Additionally, the foreign exchange adjusted increase in freight revenues per car load was 1%.

Operating income (on an adjusted basis) decreased 5% in the first quarter. Operating ratio (operating expenses as a percentage of revenues on an adjusted basis) came in at 61.3% as against 58.9% a year ago. This Zacks Rank # 3 (Hold) company still expects earnings per share to grow in high-single digits in 2017. An expected increase in volumes as well as cost-control efforts should drive the upside. Also, improvement in operating ratio is anticipated in 2017.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Canadian Pacific Railway Limited Price, Consensus and EPS Surprise


Canadian Pacific Railway Limited Price, Consensus and EPS Surprise | Canadian Pacific Railway Limited Quote


Canadian Pacific exited the first quarter with cash and cash equivalents of C$201 million as against C$164 million at the end of 2016. Long-term debt totaled C$8,583 million compared with C$8,659 million at the end of 2016.

Upcoming Releases

Investors interested in the railroad space are also keenly waiting for first-quarter earnings reports from key players like Union Pacific Corporation (UNP - Free Report) , Kansas City Southern (KSU - Free Report) and Canadian National Railway Company (CNI - Free Report) in the coming days. Union Pacific is scheduled to report on Apr 27, while Kansas City Southern and Canadian National will report on Apr 21 and Apr 24, respectively.

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