Canada Stockwatch – Canadian Pacific Railway Limited (TSE:CP, Mkt cap 38.41B, P/E 27.54, Div/yield 0.35/0.60, EPS 8.49, Shares 165.48M) has posted record first-quarter operating performance and profit, which the company attributes to its cost-control efforts over the last 12 months.
As the Wall Street Journal reports, Canada’s second-largest railroad revealed how its net income had increased to C$320 million ($262 million), or C$1.92 a share, from C$254 million, or C$1.44 a share, a year ago.
Once adjusted, the company earned C$2.26 a share, exceeding analysts’ expectations of C$2.17 a share, according to Thomson Reuters.
It also bettered analysts’ projections on revenue, which climbed by 10% to C$1.67 billion compared to a predicted figure of C$1.65 billion.
Calgary, Alberta-based CP was further boosted by news that its operating ratio – the percentage of revenue consumed by operating costs – dropped to 63.2% from 72% 12 months earlier.
There were some fears that the impact of lower prices for oil – the country’s biggest export – on the Canadian economy would send profits for the likes of CP southwards, but that doesn’t appear to have been the case.
Canadian National Railway Co., a rival of CP, also reported this week an increase in first-quarter profit as strong freight volumes and the lower Canadian dollar boosted its figures. CN saw its revenue rise 15% to C$3.1 billion.
During the first three months of the year, however, CP did note a 6% fall in crude oil-hauling revenue, but it managed to offset that with a 16% rise in grain-hauling revenue and a 29% climb for U.S. grain. Potash revenue, meanwhile, increased by 16% and fertilizers and sulfur revenue jumped 31%.
“CP’s success in the first quarter of the year is the result of hard work by its people and a business model that responds nimbly to any shift in economic conditions,” said E. Hunter Harrison, CP’s CEO. “CP’s relentless focus on rail safety and cost control has created a solid foundation for growth, innovation and creative collaboration with customers.”
What is Successful Investing? Learn more here>>
Download Our Free Special Report – How to Hunt For Value Stocks. Michael Sprung will share with you 5 stocks set for long-term gains here>>
We believe that clients gain from our focus on the long-term fundamentals and not chasing short-term trends.
Like to learn more? Please contact us here>>
The opinions expressed here are ours alone. They are provided for information purposes only and are not tailored to the needs of any particular individual or company, are not an endorsement, recommendation, or sponsorship of any entity or security, and do not constitute investment advice. We strongly recommend that you seek advice from a qualified investment advisor before making any investment decision.