Gold prices just lower; monthly gains on track
On Thursday, Citi analyst Ariel Rosa updated the investment community on Canadian Pacific (NYSE:CP) Kansas City Limited (NYSE: CP), raising the price target to $91.00 from the previous $88.00, while reiterating a Buy rating on the company’s shares. The adjustment followed Canadian Pacific’s reported fourth-quarter 2024 earnings, which surpassed both Citi’s and Wall Street’s expectations. According to InvestingPro data, the stock is currently trading above its Fair Value, with a market capitalization of $73.61 billion and a P/E ratio of 29.86.
Canadian Pacific announced an adjusted earnings per share (EPS) of C$1.29 for the fourth quarter of 2024, outperforming the estimates of C$1.22 by Citi and C$1.24 by the consensus. The company’s revenue ton-miles (RTMs) increased by 2.3%, exceeding Citi’s forecast of a 1.8% rise, and revenue per RTM also saw an unexpected uptick of 0.5%, against the anticipated 1.2% decline.
The railway’s strong quarterly performance included notable revenue and margin surpasses. The reported revenue of $3.874 billion was $73 million higher than Citi’s projection. Additionally, the adjusted operating ratio was reported at 57.1%, better than the 57.7% Citi estimated, thanks to lower compensation and benefits costs and purchased services. InvestingPro analysis reveals impressive gross profit margins of 53.63% and highlights the company’s 24-year track record of consistent dividend payments.
Canadian Pacific’s management highlighted the company’s resilience in the face of challenges during the third quarter, which included a four-day work stoppage, a derailment in North Dakota, and increased incentive compensation. Despite these issues, Canadian Pacific reaffirmed its compound annual growth rate (CAGR) guidance for 2024-2028, projecting high single-digit percentages for revenue and double-digit percentages for EPS. The EPS outlook for 2025 is set at an increase of 12% to 18%, aligning with Citi’s prior estimate of a 15% rise.
The report concluded with a positive outlook on Canadian Pacific’s management and growth profile, which Citi believes continue to justify a Buy rating for the stock. InvestingPro subscribers can access additional insights through the comprehensive Pro Research Report, including 10 more ProTips and detailed financial health metrics, where CP currently maintains a GOOD overall rating.
In other recent news, Canadian Pacific Kansas City Limited (CPKC) announced a quarterly dividend of $0.19 per share, continuing a streak of dividend payments for 24 consecutive years. The company also reported a 6% increase in revenue to $3.5 billion and an 8% rise in earnings per share to $0.99 in the third quarter. In labor relations, CPKC has reached a tentative four-year agreement with the union Unifor, affecting various Canadian employees.
Analyst firms have updated their ratings for CPKC. Wolfe Research upgraded the company’s stock rating to Outperform following the acquisition of Kansas City Southern (NYSE:KSU). Jefferies maintained a Buy rating, highlighting potential for share repurchases in 2025. RBC Capital, despite reducing its price target, upheld an Outperform rating. However, Stephens maintained an Equal Weight rating due to uncertainties, revising its price target for CPKC to $81.
These developments shed light on CPKC’s recent performance and future prospects, providing valuable insights for investors.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.