CP.TO  Canadian Pacific Railway Ltd

Exchange

TSX

Sector

Diversified Industries

Industry

Market Cap.

30682.69B

Vuru Grade

48.73/100

Current Price

$209.16
-0.16 (-0.08%)

Growth Price

$68.98
Overvalued by 67.02%

Company Metrics

  • P/E 20.81
  • P/S 4917.71
  • P/B 6.1
  • EPS 10.02
  • Cash ROIC 4.20%
  • Cash Ratio 0.12
  • Dividend 2 / 0.96%
  • Avg. Vol. 373,978.00
  • Shares 150.50M
  • Market Cap. 30682.69B

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

Is it Time to Reconsider Canadian Pacific Railway Limited?
The Motley Fool Canada - Apr 26, 2017
Canadian Pacific Railway Limited (TSX:CP)(NYSE:CP) recently reported an impressive earnings report last week which could be the start of a sustained rally to higher levels.
TD Securities Reiterates "Hold" Rating for Canadian Pacific Railway Limited (CP) - Transcript Daily
Desjardins Raises Canadian Pacific Railway Limited (CP) Price Target to C$232.00 - The Cerbat Gem
Canadian Pacific Railway Limited's (CP) CEO Keith Creel on Q1 2017 Results ...
Seeking Alpha - Apr 20, 2017
Good afternoon. My name is Mike and I will be your conference operator today. At this time, I would like to welcome everyone to Canadian Pacific's First Quarter 2017 Conference Call. The slides accompanying today's call are available at www.cpr.ca.
Railroad operator Canadian Pacific Railway's profit tops estimates - Financial Post
Canadian Pacific Railway Limited (CP): What are the future prospects? - Simply Wall St
Is Canadian Pacific Railway Limited Worth Considering?
The Motley Fool Canada - Mar 22, 2017
The stock of Canadian Pacific Railway Limited (TSX:CP)(NYSE:CP) doesn't seem to be heading anywhere in a hurry. The company is now under the command of Keith Creel, who was ex-CEO Hunter Harrison's right-hand man for over 20 years.
Railroads: Canadian Pacific Railway Limited (NYSE:CP) Position of the day - Twin County News
Zacks Industry Outlook Highlights: CSX, Canadian Pacific Railway, Norfolk ...
Yahoo Finance - Apr 24, 2017
Chicago, IL - April 24, 2017 - Today, Zacks Equity Research discusses the Industry: Railroads, Part 2, including CSX Corp. (NASDAQ: CSX - Free Report ), Canadian Pacific Railway Ltd. (NYSE: CP - Free Report ), Norfolk Southern Corp. (NYSE: NSC ...
CSX Posts Stellar Q1 Earnings: What's Ahead for Railroads? - Zacks.com
Canadian Pacific Railway Limited (CP) Receives $182.37 Average PT from Analysts
Sports Perspectives - Apr 29, 2017
Canadian Pacific Railway Limited logo Canadian Pacific Railway Limited (NYSE:CP) (TSE:CP) has earned a consensus recommendation of “Buy” from the twenty-four brokerages that are presently covering the stock.
$1.16 Billion in Sales Expected for Canadian Pacific Railway Limited (CP) This ... - Transcript Daily
Sell-side Views on: Tesla Motors, Inc. (NASDAQ:TSLA), Canadian Pacific Railway ... - Rives Journal
Canadian Pacific Railway Limited (CP) Earning Somewhat Positive News Coverage ...
The Cerbat Gem - Apr 28, 2017
Canadian Pacific Railway Limited logo News coverage about Canadian Pacific Railway Limited (NYSE:CP) (TSE:CP) has trended somewhat positive this week, AlphaOne Sentiment reports.
Canadian Pacific Railway Limited (CP) Downgraded by Loop Capital - Transcript Daily
Canadian Pacific Railway, Home Capital Group, Transalta Renewables
Times of India - Apr 20, 2017
April 20 (Reuters) - Securities analysts revised their ratings and price targets on several Canadian companies, including Canadian Pacific Railway, Home Capital Group and Transalta Renewables, on Thursday.
Canadian Pacific (CP) Q1 Earnings: What's in the Cards?
Nasdaq - Apr 17, 2017
Calgary, Canada-based railroad operator, Canadian Pacific Railway Limited CP is scheduled to report first-quarter 2017 results on Apr 19, after market close.
Railroad Stocks Q1 Earnings to Watch on Apr 19: CSX, CP - Zacks.com
CSX Corporation (CSX) Q1 Earnings: Is a Beat in the Cards? - Yahoo Finance
Canadian Pacific Railway Limited (CP) Lowered to "Hold" at Loop Capital
The Cerbat Gem - Apr 24, 2017
Canadian Pacific Railway Limited logo Loop Capital lowered shares of Canadian Pacific Railway Limited (NYSE:CP) (TSE:CP) from a buy rating to a hold rating in a research report report published on Friday morning.
Canadian Pacific Railway Limited (CP) to Release Earnings on Wednesday
The Cerbat Gem - Apr 17, 2017
Canadian Pacific Railway Limited logo Canadian Pacific Railway Limited (TSE:CP) (NYSE:CP) is set to post its quarterly earnings results on Wednesday, April 19th.
Favorable Press Coverage Very Likely to Affect Canadian Pacific Railway ... - Sports Perspectives
Canadian Railroad Earnings: What to Watch - Wall Street Journal (subscription)
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.

$209.16 Current Price

$68.98 Growth Price (DCF)

Overvalued by 67.02%


Growth Rate Assumed by Market: 37.05%


Future Free Cash Flow Growth Rate: 0.0%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$108.23 Book Price

Overvalued by 48.26%


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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