Yahoo Finance Canadian Pacific Kansas City (CP) Down 1.3% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Canadian Pacific Kansas City (CP). Shares have lost about 1.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Canadian Pacific Kansas City due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Q1 Earnings Miss at Canadian Pacific Kansas City
Canadian Pacific Kansas City’s first-quarter 2023 earnings (excluding 1 cent from non-recurring items) of 63 cents (C$0.86) per share fell short of the Zacks Consensus Estimate of 70 cents. However, the bottom line increased 26% year over year. Quarterly revenues of $1,675.9 million (C$2,266 million) missed the Zacks Consensus Estimate of $1,780.4 million and declined 6% year over year.
Freight revenues, contributing 97.8% to the top line, rose 23% on a year-over-year basis. CP’s freight segment consists of Grain (up 37%), Coal (up 11%), Potash (up 22%), Forest products (up 13%), Energy, chemicals and plastics (down 10%), Metals, minerals and consumer products (up 13%), Automotive (up 32%), Fertilizers and Sulphur (up 19%) and Intermodal (up 8%).
In the reported quarter, total freight revenues per revenue ton-miles rose 7% year over year. Total freight revenues per carload increased 10% from the year-ago quarter’s reported figure. All percentages are foreign exchange adjusted.
On a reported basis, operating income was up 55%, while total operating expenses increased 10.2% year over year in the quarter under review. Operating ratio (operating expenses as a percentage of revenues on an adjusted basis) improved to 63.4% in the March quarter from 70.5% in the year-ago quarter. Lower the value of the metric, the better.
Management expects tax rate for full-year 2023 to be 23.5%. Canadian Pacific Kansas City exited the March quarter with cash and cash equivalents of C$290 million compared with C$451 million at the end of 2022. Long-term debt amounted to C$18,066 million compared with C$18,141 million at the end of 2022.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
At this time, Canadian Pacific Kansas City has a nice Growth Score of B, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Canadian Pacific Kansas City has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Canadian Pacific Kansas City belongs to the Zacks Transportation - Rail industry. Another stock from the same industry, CSX (CSX), has gained 1.7% over the past month. More than a month has passed since the company reported results for the quarter ended March 2023.
CSX reported revenues of $3.71 billion in the last reported quarter, representing a year-over-year change of +8.6%. EPS of $0.48 for the same period compares with $0.39 a year ago.
For the current quarter, CSX is expected to post earnings of $0.49 per share, indicating a change of -2% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
CSX has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.
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