CP.TO  Canadian Pacific Railway Ltd

Exchange

TSX

Sector

Diversified Industries

Industry

Market Cap.

32.27B

Vuru Grade

48.73/100

Current Price

$220.90
+0.54 (+0.25%)

Growth Price

$71.07
Overvalued by 67.83%

Company Metrics

  • P/E 19.82
  • P/S 5
  • P/B 6.04
  • EPS 11.14
  • Cash ROIC 4.20%
  • Cash Ratio 0.12
  • Dividend 2.25 / 1.16%
  • Avg. Vol. 365,175.00
  • Shares 146.08M
  • Market Cap. 32.27B

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

Canadian Pacific Railway - More Upside Potential
Seeking Alpha - Oct 19, 2017
Canadian Pacific released its Q3 results on October 17. Despite the ~5% stock price increase subsequent to the earnings announcement, CP remains an attractive long-term investment. Adjusted diluted EPS grew 6% to $2.90. CP has revised a djusted ...
Don't Be Tricked by Canadian Pacific Railway Limited's Q3 Results - The Motley Fool Canada
Canadian Pacific Railway Limited (CP) PT Raised to $225.00 - Dispatch Tribunal
Canadian Pacific Railway Limited (CP:CA) Rises 5.1% for October 18
Equities.com (blog) - Oct 18, 2017
October 18 was a positive day for Canadian Pacific Railway Limited (CP:CA) as its stock finished the day having gained 5.1% to hit a price of $220.36 a share.
Canadian Pacific Railway's (CP) CEO Keith Creel on Q3 2017 Results - Earnings ... - Seeking Alpha
Railroad operator CP Rail's profit jumps 47 percent - Reuters
Two-year high for Canadian Pacific after earnings
Seeking Alpha - Oct 18, 2017
A confident tone from Canadian Pacific's (CP +5.8%) management during the firm's earnings call is helping shares run to a two-year high.
Canadian Pacific keeps operating expenses in check
Seeking Alpha - Oct 17, 2017
A lower level of compensation and benefits this year helped keep operating expenses in check. For the full year, Canadian Pacific expects double-digit EPS growth. "We remain grounded in our foundations of precision railroading and continue to pursue ...
Canadian Pacific Railway Limited (CP) Ex-Dividend Date Scheduled for September ...
Nasdaq - Sep 27, 2017
Canadian Pacific Railway Limited ( CP ) will begin trading ex-dividend on September 28, 2017. A cash dividend payment of $0.451 per share is scheduled to be paid on October 30, 2017.
Canadian Pacific Railway Limited (CP) Rating Lowered to Hold at Zacks ... - The Ledger Gazette
Canadian Pacific Railway Limited (NYSE:CP) dividends will reach $0.45 on Oct ... - WeeklyHub
JPMorgan Upgrades Canadian Pacific Railway Limited (CP) to Overweight
StreetInsider.com - Oct 12, 2017
JPMorgan upgraded Canadian Pacific Railway Limited (NYSE: CP) from Neutral to Overweight. Analyst Brian Ossenbeck likes the accelerating top line and increased earnings quality which he says is trading at a discount.
Does Canadian Pacific Railway Limited's (CP) PE Ratio Warrant A Buy? - Simply Wall St
Canadian Pacific Ready To Switch Tracks To Faster Sales Growth - Benzinga
Analyzing the Insider Data for Canadian Pacific Railway Limited (CP)
StockNewsGazette - Oct 19, 2017
Recent insider trends for Canadian Pacific Railway Limited (NYSE:CP) have caught the attention of investors. Patters in insider activity can help analysts formulate an outlook for a stock.
Analysts recommend to Buy services stock: Canadian Pacific Railway Limited (CP)
Street Observer (press release) - 2 hours ago
Canadian Pacific Railway Limited (CP) stock price moved with dropping change along with the volume 0.7 million shares in Thursday trading session.
Ex-Dividend Reminder: Regal Beloit, Canadian Pacific Railway and Actuant
Nasdaq - Sep 26, 2017
Looking at the universe of stocks we cover at Dividend Channel , on 9/28/17, Regal Beloit Corp (Symbol: RBC), Canadian Pacific Railway Ltd (Symbol: CP), and Actuant Corp (Symbol: ATU) will all trade ex-dividend for their respective upcoming dividends.
Canadian Pacific Railway extends into Ohio
Farm Futures - Oct 13, 2017
Canadian Pacific Railway Limited has partnered with Genesee & Wyoming Inc. and Bluegrass Farms of Ohio to further extend CP's reach into key North American markets.
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.

$220.90 Current Price

$71.07 Growth Price (DCF)

Overvalued by 67.83%


Growth Rate Assumed by Market: 37.73%


Future Free Cash Flow Growth Rate: 0.0%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$108.67 Book Price

Overvalued by 50.81%


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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