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CP Shares Rise 5.6% Since Third-Quarter 2026 Earnings Release
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Key Takeaways
CP's Q3 earnings miss estimates, but revenues beat expectations & rose 15% in Canadian dollars.
Grain revenues rose 28.8%, while intermodal revenues gain 22%, supported by robust demand & record volumes.
CP faces margin pressure from rising costs but maintains its 2026 low-double-digit EPS growth outlook
Canadian Pacific Kansas City Limited (CP - Free Report) reported third-quarter 2026 earnings of 91 cents per share, missing the Zacks Consensus Estimate of 94 cents by 3.2%. However, the bottom line increased 16% year over year on a core adjusted basis in Canadian dollars.
However, the company’s stock had a positive impact on the market as it rose 5.6% since its earnings release on Oct. 28, 2026.
Operating revenues of $3.02 billion surpassed the consensus estimate of $3.01 billion by 0.2%. In Canadian dollars, revenues increased 15% year over year to C$4.22 billion.
Results benefited from strong grain and intermodal demand, pricing gains and higher fuel surcharge revenues. Volumes, measured in revenue ton-miles (RTMs), increased 6% year over year.
Canadian Pacific Kansas City Limited Price, Consensus and EPS Surprise
Freight revenues, accounting for approximately 98% of the top line, increased 15.3% year over year to C$4.14 billion. Non-freight revenues rose 11.1% to C$80 million.
Total freight revenue per RTM increased 9% year over year, while revenue per carload rose 10%. The improvement reflected favorable pricing, business mix and higher fuel surcharge collections.
Canadian Pacific's Freight Business Shows Broad Growth
Grain revenues rose 28.8% year over year to C$904 million, supported by strong Canadian grain shipments, higher exports and increased demand from Mexico. Grain volumes, measured in RTMs, climbed 23%.
Intermodal revenues jumped 22% to C$815 million, supported by record domestic and international volumes. Energy, chemicals and plastics revenues increased 8.8% to C$763 million, while metals, minerals and consumer products revenues rose 16.2% to C$532 million.
Automotive revenues grew 8.7% to C$373 million despite production disruptions and plant retooling. Forest products revenues increased 9.3% to C$211 million.
Potash revenues rose 9% to C$182 million, while fertilizers and sulphur revenues increased 2.9% to C$105 million. Coal revenues declined marginally to C$254 million due to production-related challenges at mines.
CP Faces Higher Operating Expenses and Margin Pressure
Total operating expenses increased 17.5% year over year to C$2.73 billion, primarily due to higher fuel and labor costs. Fuel expenses surged 60.7% to C$667 million, while compensation and benefits expenses increased 14.9% to C$711 million.
Purchased services and other expenses increased 5.1% to C$594 million. Depreciation and amortization expenses rose 5.2% to C$529 million.
On a reported basis, operating income increased 11.3% to C$1.49 billion. Core adjusted operating income rose 11.7% to C$1.61 billion.
The reported operating ratio deteriorated 130 basis points to 64.8%, while the core adjusted operating ratio worsened 120 basis points to 61.9%. Higher fuel prices negatively affected the core adjusted operating ratio by 190 basis points.
Canadian Pacific Maintains Its 2026 Outlook
Canadian Pacific continues to expect core adjusted earnings per share to grow at a low double digits from the 2025 level of C$4.61.
Management expects 2026 RTMs to increase in the mid-single digits, supported by grain demand, intermodal growth and commercial opportunities across its North American network.
The company anticipates capital expenditures of approximately C$2.65 billion in 2026, representing a roughly 15% reduction from 2025. The core adjusted effective tax rate is expected to be approximately 24.75%.
CP Generates Strong Cash Flow and Shareholder Returns
Net cash provided by operating activities increased 21.7% year over year to C$1.55 billion during the third quarter. Capital expenditures on properties declined to C$613 million from C$860 million.
Adjusted free cash flow increased to C$1.02 billion from C$415 million. During the first nine months of 2026, the company returned approximately C$4.03 billion to shareholders through dividends and share repurchases.
Canadian Pacific exited September with cash and cash equivalents of C$399 million compared with C$366 million at the prior-quarter end.
Long-term debt, excluding the current portion, stood at C$22.23 billion compared with C$22.25 billion at the end of June.
Alaska Air Group, Inc. (ALK - Free Report) reported third-quarter 2026 adjusted earnings of 36 cents per share, excluding certain tax impacts, beating the Zacks Consensus Estimate of 35 cents by 2.9%. The company reported adjusted earnings of $1.05 per share a year earlier. Higher fuel expenses weighed on profitability despite strong revenue momentum.
Operating revenues increased 14.4% year over year to $4.30 billion but missed the consensus mark of $4.31 billion marginally by 0.1%.
Wabtec Corporation (WAB - Free Report) reported mixed third-quarter 2026 results, wherein earnings surpassed the Zacks Consensus Estimate while revenues missed the same.
Quarterly earnings (excluding 41 cents from non-recurring items) of $2.83 per share beat the Zacks Consensus Estimate of $2.72 by 4.04% and increased 22% year over year. Revenues climbed 8.1% year over year to $3.12 billion but missed the consensus mark of $3.18 billion by 2%. The 12-month backlog increased 8.8% to $8.99 billion.
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CP Shares Rise 5.6% Since Third-Quarter 2026 Earnings Release
Key Takeaways
Canadian Pacific Kansas City Limited (CP - Free Report) reported third-quarter 2026 earnings of 91 cents per share, missing the Zacks Consensus Estimate of 94 cents by 3.2%. However, the bottom line increased 16% year over year on a core adjusted basis in Canadian dollars.
However, the company’s stock had a positive impact on the market as it rose 5.6% since its earnings release on Oct. 28, 2026.
Operating revenues of $3.02 billion surpassed the consensus estimate of $3.01 billion by 0.2%. In Canadian dollars, revenues increased 15% year over year to C$4.22 billion.
Results benefited from strong grain and intermodal demand, pricing gains and higher fuel surcharge revenues. Volumes, measured in revenue ton-miles (RTMs), increased 6% year over year.
Canadian Pacific Kansas City Limited Price, Consensus and EPS Surprise
Canadian Pacific Kansas City Limited price-consensus-eps-surprise-chart | Canadian Pacific Kansas City Limited Quote
CP Benefits From Strong Freight Revenue Growth
Freight revenues, accounting for approximately 98% of the top line, increased 15.3% year over year to C$4.14 billion. Non-freight revenues rose 11.1% to C$80 million.
Total freight revenue per RTM increased 9% year over year, while revenue per carload rose 10%. The improvement reflected favorable pricing, business mix and higher fuel surcharge collections.
Canadian Pacific's Freight Business Shows Broad Growth
Grain revenues rose 28.8% year over year to C$904 million, supported by strong Canadian grain shipments, higher exports and increased demand from Mexico. Grain volumes, measured in RTMs, climbed 23%.
Intermodal revenues jumped 22% to C$815 million, supported by record domestic and international volumes. Energy, chemicals and plastics revenues increased 8.8% to C$763 million, while metals, minerals and consumer products revenues rose 16.2% to C$532 million.
Automotive revenues grew 8.7% to C$373 million despite production disruptions and plant retooling. Forest products revenues increased 9.3% to C$211 million.
Potash revenues rose 9% to C$182 million, while fertilizers and sulphur revenues increased 2.9% to C$105 million. Coal revenues declined marginally to C$254 million due to production-related challenges at mines.
CP Faces Higher Operating Expenses and Margin Pressure
Total operating expenses increased 17.5% year over year to C$2.73 billion, primarily due to higher fuel and labor costs. Fuel expenses surged 60.7% to C$667 million, while compensation and benefits expenses increased 14.9% to C$711 million.
Purchased services and other expenses increased 5.1% to C$594 million. Depreciation and amortization expenses rose 5.2% to C$529 million.
On a reported basis, operating income increased 11.3% to C$1.49 billion. Core adjusted operating income rose 11.7% to C$1.61 billion.
The reported operating ratio deteriorated 130 basis points to 64.8%, while the core adjusted operating ratio worsened 120 basis points to 61.9%. Higher fuel prices negatively affected the core adjusted operating ratio by 190 basis points.
Canadian Pacific Maintains Its 2026 Outlook
Canadian Pacific continues to expect core adjusted earnings per share to grow at a low double digits from the 2025 level of C$4.61.
Management expects 2026 RTMs to increase in the mid-single digits, supported by grain demand, intermodal growth and commercial opportunities across its North American network.
The company anticipates capital expenditures of approximately C$2.65 billion in 2026, representing a roughly 15% reduction from 2025. The core adjusted effective tax rate is expected to be approximately 24.75%.
CP Generates Strong Cash Flow and Shareholder Returns
Net cash provided by operating activities increased 21.7% year over year to C$1.55 billion during the third quarter. Capital expenditures on properties declined to C$613 million from C$860 million.
Adjusted free cash flow increased to C$1.02 billion from C$415 million. During the first nine months of 2026, the company returned approximately C$4.03 billion to shareholders through dividends and share repurchases.
Canadian Pacific exited September with cash and cash equivalents of C$399 million compared with C$366 million at the prior-quarter end.
Long-term debt, excluding the current portion, stood at C$22.23 billion compared with C$22.25 billion at the end of June.
Currently, Canadian Pacific has a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Q3 Performance of Other Transportation Companies
Alaska Air Group, Inc. (ALK - Free Report) reported third-quarter 2026 adjusted earnings of 36 cents per share, excluding certain tax impacts, beating the Zacks Consensus Estimate of 35 cents by 2.9%. The company reported adjusted earnings of $1.05 per share a year earlier. Higher fuel expenses weighed on profitability despite strong revenue momentum.
Operating revenues increased 14.4% year over year to $4.30 billion but missed the consensus mark of $4.31 billion marginally by 0.1%.
Wabtec Corporation (WAB - Free Report) reported mixed third-quarter 2026 results, wherein earnings surpassed the Zacks Consensus Estimate while revenues missed the same.
Quarterly earnings (excluding 41 cents from non-recurring items) of $2.83 per share beat the Zacks Consensus Estimate of $2.72 by 4.04% and increased 22% year over year. Revenues climbed 8.1% year over year to $3.12 billion but missed the consensus mark of $3.18 billion by 2%. The 12-month backlog increased 8.8% to $8.99 billion.