We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Will High Costs Hamper Canadian Pacific's (CP) Q2 Earnings?
Read MoreHide Full Article
Canadian Pacific Railway Limited (CP - Free Report) is scheduled to report second-quarter 2018 results on Jul 18 after market close.
Last reported quarter, the company came up with a negative earnings surprise of 1.4% on lower-than-expected earnings and revenues. Results were hurt by rough weather conditions. However, the top and the bottom line improved from the year-ago figures.
Things do not look up for the company this to-be-reported quarter too.
Factors at Play
Similar to the previous quarter, revenues at the Grain, Forest products and Automotive segments might decline in the second quarter as well. Soft revenues are likely to affect the top line and overall results.
The company’s high operating expenses also raise concerns and are anticipated to hurt the operating ratio, limiting bottom-line growth.
Further adding to the woes are the company’s high-debt levels. Its debt-to-equity (expressed as a percentage) ratio is currently more than 100. The figure compares unfavorably with the industry’s 71.1% average and the S&P 500 index’s tally of 81.4%.
Due to the headwinds, shares of the company have underperformed its industry in the Apr-June period, gaining only 3.7% compared with the industry’s 8.3% rise.
However, the company’s measures to reward shareholders through dividends and share buybacks are impressive. This May, it raised its quarterly dividend per share by 15.5% to C$0.65 per share. The company is also active on the repurchase front.
Earnings Whispers
Our proven model does not conclusively show that Canadian Pacific is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as elaborated below.
Zacks ESP: Canadian Pacific has an Earnings ESP of -0.59% as the Most Accurate estimate is pegged at $2.44 per share, marginally lower than the Zacks Consensus Estimate of $2.45. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Canadian Pacific carries a Zacks Rank #4 (Sell).
We caution against all Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Canadian Pacific Railway Limited Price and EPS Surprise
Investors interested in the broader Transportation sector may check out some stocks worth considering, namely United Parcel Service, Inc. (UPS - Free Report) , Union Pacific Corporation (UNP - Free Report) and J.B. Hunt Transport Services, Inc. (JBHT - Free Report) as these stocks possess the right combination of elements to come up with an earnings beat in their next releases.
UPS has an Earnings ESP of +1.34% and a Zacks Rank #3. The company will report second-quarter earnings on Jul 25.
Union Pacific has an Earnings ESP of +1.15% and a Zacks Rank of 3. The company is scheduled to release second-quarter financial figures on Jul 19.
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Image: Bigstock
Will High Costs Hamper Canadian Pacific's (CP) Q2 Earnings?
Canadian Pacific Railway Limited (CP - Free Report) is scheduled to report second-quarter 2018 results on Jul 18 after market close.
Last reported quarter, the company came up with a negative earnings surprise of 1.4% on lower-than-expected earnings and revenues. Results were hurt by rough weather conditions. However, the top and the bottom line improved from the year-ago figures.
Things do not look up for the company this to-be-reported quarter too.
Factors at Play
Similar to the previous quarter, revenues at the Grain, Forest products and Automotive segments might decline in the second quarter as well. Soft revenues are likely to affect the top line and overall results.
The company’s high operating expenses also raise concerns and are anticipated to hurt the operating ratio, limiting bottom-line growth.
Further adding to the woes are the company’s high-debt levels. Its debt-to-equity (expressed as a percentage) ratio is currently more than 100. The figure compares unfavorably with the industry’s 71.1% average and the S&P 500 index’s tally of 81.4%.
Due to the headwinds, shares of the company have underperformed its industry in the Apr-June period, gaining only 3.7% compared with the industry’s 8.3% rise.
However, the company’s measures to reward shareholders through dividends and share buybacks are impressive. This May, it raised its quarterly dividend per share by 15.5% to C$0.65 per share. The company is also active on the repurchase front.
Earnings Whispers
Our proven model does not conclusively show that Canadian Pacific is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as elaborated below.
Zacks ESP: Canadian Pacific has an Earnings ESP of -0.59% as the Most Accurate estimate is pegged at $2.44 per share, marginally lower than the Zacks Consensus Estimate of $2.45. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Canadian Pacific carries a Zacks Rank #4 (Sell).
We caution against all Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Canadian Pacific Railway Limited Price and EPS Surprise
Canadian Pacific Railway Limited Price and EPS Surprise | Canadian Pacific Railway Limited Quote
Stocks to Consider
Investors interested in the broader Transportation sector may check out some stocks worth considering, namely United Parcel Service, Inc. (UPS - Free Report) , Union Pacific Corporation (UNP - Free Report) and J.B. Hunt Transport Services, Inc. (JBHT - Free Report) as these stocks possess the right combination of elements to come up with an earnings beat in their next releases.
UPS has an Earnings ESP of +1.34% and a Zacks Rank #3. The company will report second-quarter earnings on Jul 25.
Union Pacific has an Earnings ESP of +1.15% and a Zacks Rank of 3. The company is scheduled to release second-quarter financial figures on Jul 19.
J.B. Hunt has an Earnings ESP of +2.13% and a Zacks Rank #2. The company will announce second-quarter earnings numbers on Jul 16. You can see the complete list of today’s Zacks #1 Rank stocks here.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>