CP.TO  Canadian Pacific Railway Ltd

Exchange

TSX

Sector

Diversified Industries

Industry

Market Cap.

28671.65B

Vuru Grade

48.73/100

Current Price

$195.89
-1.62 (-0.82%)

Growth Price

$68.98
Overvalued by 64.78%

Company Metrics

  • P/E 18.43
  • P/S 4638.76
  • P/B 6.25
  • EPS 10.63
  • Cash ROIC 4.20%
  • Cash Ratio 0.12
  • Dividend 2 / 1.01%
  • Avg. Vol. 358,333.00
  • Shares 150.50M
  • Market Cap. 28671.65B

Company Description

Canadian Pacific Railway Limited, through its subsidiaries, provides rail and intermodal freight transportation services. It transports bulk commodities, including grain, coal, sulphur, and fertilizers; and merchandise freight that consists of finished vehicles and automotive parts. The company also transports forest products, such as wood pulp, paper, paperboard, newsprint, lumber, panel, and ori... more


Download 10 Years of Financial Statements:
Income Statement   Balance Sheet   Cash Flow

News

Artisan Partners Limited Partnership Buys Canadian Pacific Railway, Pioneer ...
Nasdaq - Feb 9, 2017
Artisan Partners Limited Partnership initiated holdings in Pioneer Natural Resources Co. The purchase prices were between $171.11 and $193.24, with an estimated average price of $183.22.
The other side of Hunter Harrison's CP legacy: white-collar workers driving trains
Financial Post - Feb 16, 2017
An employee of Canadian Pacific Railway Ltd. was asleep in a small Prairie town hotel when a middle-of-the-night phone call startled him awake.
Outgoing CP Rail boss barred from hiring managers except chief of staff
Reuters - Jan 23, 2017
MONTREAL The outgoing chief executive of Canadian Pacific Railway Ltd (CP.TO), said to be in advanced talks with a partner to shake up CSX Corp (CSX.
Why Hunter Harrison Heading to Another Railroad Is Big News for Your Portfolio - The Motley Fool Canada
'Dominating the discussion:' Analysts dig into CSX in wake of railroad legend ... - Jacksonville Business Journal
Hunter Harrison sells CP Rail shares for $35-million
The Globe and Mail - Jan 26, 2017
Hunter Harrison has sold his shares in Canadian Pacific Railway Ltd., shortly after quitting as chief executive officer of the Calgary company to pursue the top job at Florida-based railway CSX Corp.
Renaissance Technologies LLC Boosts Stake in Canadian Pacific Railway Limited (CP)
The Cerbat Gem - Feb 17, 2017
Canadian Pacific Railway Limited logo Renaissance Technologies LLC increased its stake in Canadian Pacific Railway Limited (NYSE:CP) (TSE:CP) by 125.0% during the fourth quarter, according to its most recent Form 13F filing with the Securities and ...
Form 8-K CANADIAN PACIFIC RAILWAY For: Feb 16 - StreetInsider.com
Trexquant Investment LP Acquires 4107 Shares of Canadian Pacific Railway ... - BNB Daily (blog)
Canadian Pacific announces filing of Annual Report on Form 10-K
Canada NewsWire (press release) - Feb 16, 2017
CALGARY, Feb. 16, 2017 /CNW/ - Canadian Pacific Railway Limited (TSX: CP) (NYSE: CP) announced today that it has completed the filing of its 2016 annual report on Form 10-K, including the annual audited financial statements and management's ...
Canadian Pacific Railway Ltd. - Receive News & Ratings Daily
The Cerbat Gem - Jan 20, 2017
Canadian Pacific Railway logo Canadian Pacific Railway Ltd. (NYSE:CP) (TSE:CP) - Research analysts at Cormark lowered their Q4 2017 earnings estimates for Canadian Pacific Railway in a report released on Thursday.
Canadian Pacific Railway Ltd. (CP) CEO E Hunter Harrison Sells 178617 Shares - Sports Perspectives
Insider Trading Activity Canadian Pacific Railway Limited (NYSE:CP) – VP Sold ...
Market Exclusive - Jan 30, 2017
On 4/25/2016 Peter John Edwards, VP Buy, 1 $147.00 with an average share price of $147.00 View SEC Filing 4/22/2016 per share and the total transaction amounting to Pershing Square Capital Manage.
Russell Investments Group Ltd. Invests $33510000 in Canadian Pacific Railway ... - Sports Perspectives
M&R Capital Management Inc. Has $1152000 Stake in Canadian Pacific Railway ...
The Cerbat Gem - Feb 7, 2017
Canadian Pacific Railway Limited logo M&R Capital Management Inc. raised its position in Canadian Pacific Railway Limited (NYSE:CP) (TSE:CP) by 2.3% during the fourth quarter, according to its most recent filing with the Securities and Exchange ...
Canadian Pacific Railway Limited (CP) Receives Average Rating of “Buy” from ... - Sports Perspectives
The Canadian Pacific Railway Limited (CP) – Investment Analysts' Recent ... - DailyQuint
Canadian Pacific Railway Limited Declares Quarterly Dividend of C$0.50 (CP)
Sports Perspectives - Feb 14, 2017
Canadian Pacific Railway Limited logo Canadian Pacific Railway Limited (TSE:CP) (NYSE:CP) announced a quarterly dividend on Tuesday, February 14th.
Growth Rate Assumed by Market

We did a reverse valuation to calculate the growth rate the market is assuming for CP.TO to be considered fairly valued at its current market price. It's useful to compare this to the growth rate we're assuming for the Growth Price.

Future Free Cash Flow Growth Rate

This is the annual growth rate we've applied to calculate CP.TO's Free Cash Flow for the next 10 years. To calculate it, we looked at several time periods of the last 10 years. Feel free to adjust it, but we limit the initial growth rate to 20% and slow it down over the years. Otherwise, long-term sustainability issues come into play.

Discount Rate

The discount rate is the annual rate of return an investor requires to take the risk of investing in a single stock. To account for that risk, this should be above 8-10%, as this is the avg. annual rate of return for the S&P500 over the past 100 years.

$195.89 Current Price

$68.98 Growth Price (DCF)

Overvalued by 64.78%


Growth Rate Assumed by Market: 35.23%


Future Free Cash Flow Growth Rate: 0.0%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$106.61 Book Price

Overvalued by 45.58%


Poor Cash Return on Invested Capital over the past 5 years

CP.TO has been unable to consistently generate sufficient returns from its investments in buildings, projects and equipment. This could be due to poor management, lack of an economic moat or the capital intensive nature of the business.

CP.TO has only created $4.20 of cash for every $100 invested.
Figures in CAD. Fiscal year ends in December
20122013201420152016
Free Cash Flow 180.00M 714.00M 674.00M 937.00M 907.00M
divided by
Invested Capital 13.16B 15.21B 15.00B 17.54B 17.71B
Cash ROIC 1.37% 4.70% 4.49% 5.34% 5.12%

Excellent Return on Equity over the past 5 years

Over the past 5 years, CP.TO has generated strong profits with money shareholders have invested. This is considered one of the best indicators of quality management. Beware of extremely high Return on Equity (> 50%) as this is often unsustainable.

CP.TO has generated $22.18 of Earnings for every $100 of Shareholders' Equity.
Figures in CAD. Fiscal year ends in December
20122013201420152016
Net Income 484.00M 875.00M 1.48B 1.35B 1.60B
divided by
Stockholders' Equity 5.10B 7.10B 5.61B 4.80B 4.63B
Return on Equity 9.50% 12.33% 26.31% 28.19% 34.57%

Good Business Performance over the past 10 years

It's likely CP.TO has been unable to maintain profitability in tough economic times, making it a somewhat cyclical business. The other possibility is CP.TO has expended significant capital on items such as property, plant and equipment in specific years. Look for correlations.

CP.TO has created positive free cash flow for 7 or 8 of the past 10 years.
Figures in CAD. Fiscal year ends in December
2007200820092010201120122013201420152016
Free Cash Flow 421.40M 186.80M -170.90M -224.00M -592.00M 180.00M 714.00M 674.00M 937.00M 907.00M

Weak Balance Sheet

CP.TO's financial position is not ideal. The key is to check whether CP.TO is using debt to fuel its growth and the sustainability of that tendency. Highly capital intensive businesses (see Economic Moat) follow this route, which can deeply impact the future prospects of the business.
Figures in CAD. Fiscal year ends in December
2007200820092010201120122013201420152016
Cash 378.10M 117.60M 679.10M 360.60M 47.00M 333.00M 476.00M 226.00M 650.00M 164.00M
Current Assets 1.17B 1.12B 1.43B 1.20B 856.00M 1.33B 2.03B 1.28B 1.54B 1.01B
Total Assets 13.37B 15.47B 15.53B 13.68B 14.11B 14.73B 17.06B 16.64B 19.64B 19.22B
Current Liabilities 1.34B 1.31B 1.38B 1.29B 1.21B 1.23B 1.38B 1.41B 1.45B 1.35B
Total Liabilities 7.91B 9.48B 8.83B 8.85B 9.46B 9.63B 9.96B 11.03B 14.84B 14.60B
Stockholder' Equity 5.46B 5.99B 6.71B 4.82B 4.65B 5.10B 7.10B 5.61B 4.80B 4.63B
Current Ratio 0.87 0.86 1.03 0.93 0.71 1.08 1.47 0.91 1.06 0.75
TL-to-TA 0.59 0.61 0.57 0.65 0.67 0.65 0.58 0.66 0.76 0.76

Low or No Reinvestment of Profits over the past 10 years

CP.TO has either been retaining a small amount of their earnings or has done so inconsistently. A lack of consistency could be due to CP.TO operating at a loss or them having such a strong economic moat they feel comfortable spending profits on growth. Be wary of future prospects and if applicable, inspect the moat's sustainability.
Figures in CAD. Fiscal year ends in December
2007200820092010201120122013201420152016
Retained Earnings 4.19B 4.65B 4.88B 5.07B 5.45B 5.70B 6.33B 5.61B 4.17B 4.37B
Retained Earnings Growth - 11.15% 4.78% 4.03% 7.33% 4.63% 11.04% -11.35% -25.61% 4.77%

Potential Competitive Advantage over the past 10 years

CP.TO potentially has a competitive advantage. This could be strong branding, the ability to keep costs low, or some other characteristic that is hard to replicate. Look at its future prospects to determine sustainability and whether the economic moat will strengthen.

$16.18 of every $100 of Revenue have been pure profit, on average over the past 10 years.
Figures in CAD. Fiscal year ends in December
2007200820092010201120122013201420152016
Net Income 946.20M 619.00M 612.40M 650.70M 570.00M 484.00M 875.00M 1.48B 1.35B 1.60B
divided by
Revenue 4.71B 4.93B 4.30B 4.98B 5.18B 5.70B 6.13B 6.62B 6.71B 6.23B
Net Profit Margin 20.10% 12.55% 14.23% 13.06% 11.01% 8.50% 14.27% 22.30% 20.14% 25.66%

Strong Pricing Power over the past 10 years

CP.TO has maintained substantial gross margins, suggesting that they have been able to set prices without consideration of the cost of goods sold. This potentially leaves flexibility in inflationary environments to raise prices on consumers and maintain profitability.

$69.24 of every $100 worth of sales have been Gross Profit, on average over the past 10 years.
Figures in CAD. Fiscal year ends in December
2007200820092010201120122013201420152016
Gross Profit 2.48B 3.04B 2.85B 3.24B 5.18B 3.52B 4.00B 4.39B 4.59B 5.31B
divided by
Revenue 4.71B 4.93B 4.30B 4.98B 5.18B 5.70B 6.13B 6.62B 6.71B 6.23B
Gross Margin 52.58% 61.57% 66.21% 65.09% 100.00% 61.77% 65.29% 66.37% 68.33% 85.24%

High Capital Intensity over the past 10 years

CP.TO spends large amounts of capital buying new equipment or investing in new facilities to stay competitive. Over the long term, those costs may have to be fuelled by debt. Look at the growth of Shareholders' Equity to see if this strategy is having a positive or negative impact.

132.49% of Profits are being spent on Capital Expenditures, like Property, Plant, & Equipment, required to run the business.
Figures in CAD. Fiscal year ends in December
2007200820092010201120122013201420152016
Capital Expenditure 893.20M 892.30M 722.40M 726.10M 1.10B 1.15B 1.24B 1.45B 1.52B 1.18B
divided by
Net Income 946.20M 619.00M 612.40M 650.70M 570.00M 484.00M 875.00M 1.48B 1.35B 1.60B
Capital Expenditure Ratio 94.40% 144.15% 117.96% 111.59% 193.68% 237.19% 141.26% 98.17% 112.57% 73.92%

Very Strong Dividend History over the past 10 years

CP.TO has consistently distributed a dividend for at least the past 10 years. Such a long dividend history suggests CP.TO is very established in its market and that its dividend distribution is likely to continue for a significant period of time.
Figures in CAD. Fiscal year ends in December
2007200820092010201120122013201420152016
Dividend Paid 133.10M 148.70M 162.90M 174.50M 193.00M 223.00M 244.00M 244.00M 226.00M 255.00M
divided by
Shares Outstanding 155.63M 155.60M 166.80M 169.20M 170.60M 173.20M 176.50M 174.40M 161.00M 150.50M
Dividend Paid Per Share 0.85 0.95 0.97 1.02 1.12 1.28 1.37 1.39 1.39 1.68
Price at Year End 60.23 38.18 54.85 63.43 69.01 100.50 160.00 224.30 176.99 191.56
Dividend Yield 1.41% 2.48% 1.77% 1.61% 1.63% 1.27% 0.86% 0.62% 0.79% 0.88%

History of Stock Buybacks over the past 10 years

CP.TO has some history of delivering increased value for shareholders in the form of stock buybacks. These have helped improve financial metrics and increase each shareholders' relative ownership stake in the company, due to fewer shares outstanding and holding the same number of shares.
Figures in CAD. Fiscal year ends in December
2007200820092010201120122013201420152016
Shares Outstanding 155.63M 155.60M 166.80M 169.20M 170.60M 173.20M 176.50M 174.40M 161.00M 150.50M
Stock Bought Back - 0.02% -6.71% -1.42% -0.82% -1.50% -1.87% 1.20% 8.32% 6.98%
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