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Canadian Pacific's Financial Triumph: Surges Beyond Estimates with Bold 2024 Outlook

AInvestTuesday, Jan 30, 2024 8:49 pm ET
1min read

$CP(CP)

In its earnings report out Tuesday afternoon, Canadian Pacific (CP) surpassed analyst estimates, showcasing strong financial performance and a positive outlook for the future. The company, a leading Class-1 railroad operator spanning across Canada, the United States, and Mexico, reported earnings of CC$1.18 per share in the fourth quarter (Q4) of 2023, excluding non-recurring items, beating estimates of CC$1.12 by CC$0.06. Revenue grew significantly by 53.4% year-over-year, reaching a total of CC$3.78 billion, exceeding the anticipated CC$3.67 billion.

CP forecasts double-digit growth in adjusted EPS for the fiscal year (FY) 2024. Capital expenditures for the year are expected to amount to $2.75 billion. In Q4, the company's revenues increased to $3.8 billion, with a full-year total of $12.555 billion. Although the reported operating ratio for Q4 worsened to 61.8%, the core adjusted combined operating ratio (OR) improved to 58.7%. Reported diluted EPS in Q4 decreased to $1.10, while core adjusted combined diluted EPS rose to $1.18.

Safety metrics saw significant improvements in both Q4 and full-year results. The Federal Railroad Administration (FRA)-reportable train accident and personal injury frequencies experienced notable declines. As for the 2024 outlook, CP expects core adjusted combined diluted EPS to grow double digits compared to 2023.

Following the merger with Kansas City Southern in April 2023, Canadian Pacific Kansas City Ltd (NYSE:CP) now offers single-line-haul services across North America. This extensive network facilitates the transportation of a diverse range of products, including grain, intermodal containers, and energy products, making the company a critical component of the continental supply chain.

Despite challenges in operational efficiency, with the reported operating ratio deteriorating and core adjusted combined operating ratio improvements, CP's financial performance and safety metrics are significant achievements within the transportation industry. The company's revenue growth and unique synergy opportunities, combined with improving macro-economic conditions, demonstrate confidence in overcoming challenges such as a weak Canadian grain crop. CP President and CEO, Keith Creel, expressed pride in the team's performance and commitment to delivering sustainable growth for customers and shareholders.


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