Canadian Pacific Rail

CP-T

TSE:CP

301.02
3.18 (1.05%)
The Canadian Pacific Railway, also known formerly as CP Rail between 1968 and 1996, is a historic Canadian Class I railroad incorporated in 1881.
More at Wikipedia

Analysis and Opinions about CP-T

Signal
Opinion
Expert
COMMENT
COMMENT
February 4, 2016

Versus Canadian National (CNR-T), he is paying close to 4X book on CNR, and 5.5X on CP. This company has to earn a much more substantial ROE for all other things to be equal. He is not just looking at ROE, but also at total returns, including dividends. They have both pulled back considerably from their highs, but that has been because of a weakening economy. He still looks at CNR as the benchmark railroad in North America.

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Versus Canadian National (CNR-T), he is paying close to 4X book on CNR, and 5.5X on CP. This company has to earn a much more substantial ROE for all other things to be equal. He is not just looking at ROE, but also at total returns, including dividends. They have both pulled back considerably from their highs, but that has been because of a weakening economy. He still looks at CNR as the benchmark railroad in North America.

COMMENT
COMMENT
February 3, 2016

Prefers Canadian National (CNR-T) and their US exposure from when they bought Illinois Central. This one has a lot of commodity exposure.

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Prefers Canadian National (CNR-T) and their US exposure from when they bought Illinois Central. This one has a lot of commodity exposure.

COMMENT
COMMENT
January 7, 2016

Hasn’t owned the rails in recent years, because he felt they were running way ahead of themselves. At the end of the day, railroads have got to reflect what is happening in the general economy and he thought that the price run ups that were happening were in excess of that. Between the 2 rails, he would prefer Canadian National (CNR-T). It gives you a more integrated North American network.

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Hasn’t owned the rails in recent years, because he felt they were running way ahead of themselves. At the end of the day, railroads have got to reflect what is happening in the general economy and he thought that the price run ups that were happening were in excess of that. Between the 2 rails, he would prefer Canadian National (CNR-T). It gives you a more integrated North American network.

BUY
BUY
December 24, 2015

He bought about 6 months ago. He thinks it is now a good entry point. The multiple is telling you there are overhangs. E.g. Coal and Oil. They are making a bid for NSC-N because they think they can bring down costs and push revenues higher. CP-T is the best North American railroad. He also owns NSC-N, however he thinks there still may be some downside risk to that one.

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He bought about 6 months ago. He thinks it is now a good entry point. The multiple is telling you there are overhangs. E.g. Coal and Oil. They are making a bid for NSC-N because they think they can bring down costs and push revenues higher. CP-T is the best North American railroad. He also owns NSC-N, however he thinks there still may be some downside risk to that one.

TOP PICK
TOP PICK
December 8, 2015

Valuation has come off a lot. They are doing the right things. They are streamlining the speed of their networks up. Thinks US economy continues to grow and he has taken advantage of the dip in the valuation data position. Dividend yield of 0.82%.

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Valuation has come off a lot. They are doing the right things. They are streamlining the speed of their networks up. Thinks US economy continues to grow and he has taken advantage of the dip in the valuation data position. Dividend yield of 0.82%.

DON'T BUY
DON'T BUY
November 23, 2015

It is valued on the basis of things like market share, the rail business overall and growth potential. Crude by rail is a growth area. He thinks we saw a peak earlier this year. It is not a massive growth industry. Rails are a lot more economically sensitive. Baltic dry freight rates are the lowest they have been in 30 years. This will be a headwind for these guys.

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It is valued on the basis of things like market share, the rail business overall and growth potential. Crude by rail is a growth area. He thinks we saw a peak earlier this year. It is not a massive growth industry. Rails are a lot more economically sensitive. Baltic dry freight rates are the lowest they have been in 30 years. This will be a headwind for these guys.

HOLD
HOLD
November 23, 2015

(Market Call Minute) Prefers CNR-T unless they buy Norfolk Southern.

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(Market Call Minute) Prefers CNR-T unless they buy Norfolk Southern.

COMMENT
COMMENT
November 18, 2015

It was very interesting that this would go up 6% today on what he would consider to be a stink bid. He doesn’t think Norfolk Southern (NSC-N) is going to accept their bid, and doesn’t think anybody else thinks they are either. If the bid does get accepted, it is going to be a long 18-24 month regulatory approval process.

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It was very interesting that this would go up 6% today on what he would consider to be a stink bid. He doesn’t think Norfolk Southern (NSC-N) is going to accept their bid, and doesn’t think anybody else thinks they are either. If the bid does get accepted, it is going to be a long 18-24 month regulatory approval process.

COMMENT
COMMENT
November 6, 2015

Technically if he had to choose between this and Canadian National (CNR-T), he would choose CNR. CP has a lot of the resource side of the equation in it, and he is not sure that we have put a bottom in this yet. It depends a lot on commodities and how much shipping we are going to have.

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Technically if he had to choose between this and Canadian National (CNR-T), he would choose CNR. CP has a lot of the resource side of the equation in it, and he is not sure that we have put a bottom in this yet. It depends a lot on commodities and how much shipping we are going to have.

COMMENT
COMMENT
November 6, 2015

This almost tracks the same as the transports in the US. A lot of the rails have corrected. We have had a sort of Bear this year and it is coming to an end. Expects it will break out and go higher. Thinks you will be okay with this.

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This almost tracks the same as the transports in the US. A lot of the rails have corrected. We have had a sort of Bear this year and it is coming to an end. Expects it will break out and go higher. Thinks you will be okay with this.

BUY
BUY
November 5, 2015

They guided down. They said the outlook was cloudy over the next 6-12 months on weak crude by rail and coal. With lower Operating Ratios, a lower CapX, asset sales and buybacks, he still has this modelling at 70% EPS growth over the next couple of years. If this holds true, then EPS in 2018 will still be almost double what it was for 2014. A lot cheaper than Canadian National (CNR-T). Still a little bit of a premium towards US comps, but it has a very powerful Cdn$ advantage over them.

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They guided down. They said the outlook was cloudy over the next 6-12 months on weak crude by rail and coal. With lower Operating Ratios, a lower CapX, asset sales and buybacks, he still has this modelling at 70% EPS growth over the next couple of years. If this holds true, then EPS in 2018 will still be almost double what it was for 2014. A lot cheaper than Canadian National (CNR-T). Still a little bit of a premium towards US comps, but it has a very powerful Cdn$ advantage over them.

Greg Newman

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Price
$179.090
Owned
Unknown
COMMENT
COMMENT
November 4, 2015

Has been a darling ever since that whole management shakeup when they put in Hunter Harrison, who has done a marvellous job taking the operating ratio down to levels that passed original expectations. He can’t explain why the stock has come off the way it has. It may be that it is just an excess of selling or shorting. He is looking at this with interest. It has good growth, a balance sheet that isn’t quite as strong as Canadian National (CNR-T). Multiples are a little bit high at what they trade at historically.

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Has been a darling ever since that whole management shakeup when they put in Hunter Harrison, who has done a marvellous job taking the operating ratio down to levels that passed original expectations. He can’t explain why the stock has come off the way it has. It may be that it is just an excess of selling or shorting. He is looking at this with interest. It has good growth, a balance sheet that isn’t quite as strong as Canadian National (CNR-T). Multiples are a little bit high at what they trade at historically.

DON'T BUY
DON'T BUY
November 2, 2015

Feels that the Hunter Harrison halo effect has gone away to some degree. There has been some pressure on the shipping of oil by rail also. However, the infrastructure for the longer-term is in place. A large part of this has to do with the global growth expectations. Unless economic growth is really going to jump up, he wouldn’t see the ability for them to push through pricing increases.

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Feels that the Hunter Harrison halo effect has gone away to some degree. There has been some pressure on the shipping of oil by rail also. However, the infrastructure for the longer-term is in place. A large part of this has to do with the global growth expectations. Unless economic growth is really going to jump up, he wouldn’t see the ability for them to push through pricing increases.

COMMENT
COMMENT
October 30, 2015

He prefers Canadian National (CNR-T). Canadian Pacific had a little bit of a Hunter Harrison valuation baked into it. The stock has been growing into that valuation slowly, so the shares have been underperforming.

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He prefers Canadian National (CNR-T). Canadian Pacific had a little bit of a Hunter Harrison valuation baked into it. The stock has been growing into that valuation slowly, so the shares have been underperforming.

DON'T BUY
DON'T BUY
October 14, 2015

He does not have exposure to rails at this time. They are economically sensitive. Right now the markets have a bleak look on the economy. He prefers CNR-T to CP-T for their North American footprint and the fact that it is exposed to the US.

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He does not have exposure to rails at this time. They are economically sensitive. Right now the markets have a bleak look on the economy. He prefers CNR-T to CP-T for their North American footprint and the fact that it is exposed to the US.

COMMENT
COMMENT
September 16, 2015

This has been a roller coaster. There was some really strong performance in 2014, and it was getting way ahead of itself. There has been a pullback in the whole transportation sector. This one stumbled in Q2. Didn’t meet expectations. The sector has come back a lot. Fundamentally, the P/E ratio for the last 5 years has been about 19, and is currently trading at about 18.4. Seasonally the transportation sector tends to do well starting in October, so this is a good time to start taking a look at the railways. It may start a little bit late because of the overall drag of what has happened with the whole commodities sector passing through. Starting to look like a good opportunity.

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Canadian Pacific Rail (CP-T)
September 16, 2015

This has been a roller coaster. There was some really strong performance in 2014, and it was getting way ahead of itself. There has been a pullback in the whole transportation sector. This one stumbled in Q2. Didn’t meet expectations. The sector has come back a lot. Fundamentally, the P/E ratio for the last 5 years has been about 19, and is currently trading at about 18.4. Seasonally the transportation sector tends to do well starting in October, so this is a good time to start taking a look at the railways. It may start a little bit late because of the overall drag of what has happened with the whole commodities sector passing through. Starting to look like a good opportunity.

DON'T BUY
DON'T BUY
August 28, 2015

There is a big drop in crude by rail. Thinks it is going to continue to be challenging for the next little while, because there are some refineries shutting down for regular maintenance. A very well-run company. The company has been buying back a lot of stock. This is so tied to the commodity cycle, coal and economic activity he just doesn’t think it is a kind of thing that you need to be involved in at this stage.

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There is a big drop in crude by rail. Thinks it is going to continue to be challenging for the next little while, because there are some refineries shutting down for regular maintenance. A very well-run company. The company has been buying back a lot of stock. This is so tied to the commodity cycle, coal and economic activity he just doesn’t think it is a kind of thing that you need to be involved in at this stage.

DON'T BUY
DON'T BUY
July 21, 2015

This is one he is paying attention to. Had sold his holdings way too early. They cut their revenue guidance and it is trading at about 20X this year’s earnings. He can buy others such as CSX Rail and Union Pacific and Canadian National at a much cheaper valuation. Wouldn’t buy at these levels.

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This is one he is paying attention to. Had sold his holdings way too early. They cut their revenue guidance and it is trading at about 20X this year’s earnings. He can buy others such as CSX Rail and Union Pacific and Canadian National at a much cheaper valuation. Wouldn’t buy at these levels.

DON'T BUY
DON'T BUY
July 14, 2015

This sector, both in Canada and the US, has been underperforming and is actually diverging against the broader S&P 500 or the TSX. It is struggling to keep the prior support level of around $200. A little dangerous looking, but will probably find some support sooner or later. He wouldn’t enter the stock.

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This sector, both in Canada and the US, has been underperforming and is actually diverging against the broader S&P 500 or the TSX. It is struggling to keep the prior support level of around $200. A little dangerous looking, but will probably find some support sooner or later. He wouldn’t enter the stock.

DON'T BUY
DON'T BUY
May 28, 2015

TCK.B-T is pulling back on coal shipments, announced today. You have a lot of time before you buy into CP-T. It is very expensive. He admires management and had a positive oil market work in his favour. Commodities are starting to work to their disadvantage now. He is very cautious on the stock. Now is the time to take your profits if you held it over the last few years.

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TCK.B-T is pulling back on coal shipments, announced today. You have a lot of time before you buy into CP-T. It is very expensive. He admires management and had a positive oil market work in his favour. Commodities are starting to work to their disadvantage now. He is very cautious on the stock. Now is the time to take your profits if you held it over the last few years.

COMMENT
COMMENT
May 26, 2015

It looks like in the near term the rails are going through a rough period. Canadian rails have benefited greatly from carrying oil to the US. As the price of oil has come down, there hasn’t been as much shipped. This is a short-term thing and the rails are probably underperforming in the near term. In the long term, he still likes them. Prefers Canadian National (CNR-T), but this is a fine company.

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It looks like in the near term the rails are going through a rough period. Canadian rails have benefited greatly from carrying oil to the US. As the price of oil has come down, there hasn’t been as much shipped. This is a short-term thing and the rails are probably underperforming in the near term. In the long term, he still likes them. Prefers Canadian National (CNR-T), but this is a fine company.

COMMENT
COMMENT
May 22, 2015

Canadian rails? He is neutral on these. These are economy stocks and are somewhat cyclical. He is a little concerned that oil shipments have slowed down, so you may see earnings going kind of sideways. On that basis, an 18 multiple is probably too high, and perhaps should be down around15. We may have to wait a few more years before another cycle starts.

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Canadian rails? He is neutral on these. These are economy stocks and are somewhat cyclical. He is a little concerned that oil shipments have slowed down, so you may see earnings going kind of sideways. On that basis, an 18 multiple is probably too high, and perhaps should be down around15. We may have to wait a few more years before another cycle starts.

BUY
BUY
May 21, 2015

The rail sector is a good buying opportunity here if you are long-term oriented. The pull back is related to lower commodity prices. He is buying CNR-T and UNP-N. You can’t really go wrong here.

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The rail sector is a good buying opportunity here if you are long-term oriented. The pull back is related to lower commodity prices. He is buying CNR-T and UNP-N. You can’t really go wrong here.

COMMENT
COMMENT
April 27, 2015

Canadian National (CNR-T) or Canadian Pacific (CP-T)? Given his positive outlook on the US and Canadian economy’s, rails are a great place to be looking 03-5 years. Canadian National is the cheaper of the 2, but this one has done a grand job.

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Canadian National (CNR-T) or Canadian Pacific (CP-T)? Given his positive outlook on the US and Canadian economy’s, rails are a great place to be looking 03-5 years. Canadian National is the cheaper of the 2, but this one has done a grand job.

BUY
BUY
April 23, 2015

Just had their earnings yesterday and he boosted his target price $5 to $250 even with weaker crude by rail, a lower Cdn$ and coal. Management is competent. They can double their earnings per share by 2018. He sees them earning $17 in 2017. Which puts them at a 14.1X PE. The only concern he has are possible regulatory issues.

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Just had their earnings yesterday and he boosted his target price $5 to $250 even with weaker crude by rail, a lower Cdn$ and coal. Management is competent. They can double their earnings per share by 2018. He sees them earning $17 in 2017. Which puts them at a 14.1X PE. The only concern he has are possible regulatory issues.

Greg Newman

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Price
$239.910
Owned
Unknown
COMMENT
COMMENT
March 10, 2015

This has some pluses and minuses. The minuses would be that a lot of the rails have benefited from the boom in moving energy around, which may slow down a little bit. However, the cost of energy is lower than what it has been.

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This has some pluses and minuses. The minuses would be that a lot of the rails have benefited from the boom in moving energy around, which may slow down a little bit. However, the cost of energy is lower than what it has been.

COMMENT
COMMENT
February 6, 2015

Operating margins last quarter had a 600 basis point improvement. If he compares that to Canadian National (CNR-T) there is some room for further operating margin expansion, but we are in the later innings of that game. Lower energy prices is a positive. Oil shipments may decline, but they will pick up in other areas. Fairly valued at this level. Anything under $200, there is upside.

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Operating margins last quarter had a 600 basis point improvement. If he compares that to Canadian National (CNR-T) there is some room for further operating margin expansion, but we are in the later innings of that game. Lower energy prices is a positive. Oil shipments may decline, but they will pick up in other areas. Fairly valued at this level. Anything under $200, there is upside.

BUY
BUY
January 30, 2015

If Keystone is passed, will this hurt the rails? In all of their crude by rail estimates, they assume that Keystone goes through, so don’t let that hold you back. Crude is about 10% of their business. They have calculated that if crude falls by half, they actually will have better margins because of the better economy, and better top and bottom lines. This is a phenomenal rail company. Trading at around 17X 2016 estimates and is less than Canadian National (CNR-T) right now. He thinks this has upside.

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If Keystone is passed, will this hurt the rails? In all of their crude by rail estimates, they assume that Keystone goes through, so don’t let that hold you back. Crude is about 10% of their business. They have calculated that if crude falls by half, they actually will have better margins because of the better economy, and better top and bottom lines. This is a phenomenal rail company. Trading at around 17X 2016 estimates and is less than Canadian National (CNR-T) right now. He thinks this has upside.

COMMENT
COMMENT
January 28, 2015

The stock chart looks like it is tapping out here. He would think that with a slowing economy, this will be affected. Have done a great job of improving the operating ratio, but there is only so much you can do. Not a stock that he would be particularly attracted to right now. Doesn’t think it has a lot of wind at its back.

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The stock chart looks like it is tapping out here. He would think that with a slowing economy, this will be affected. Have done a great job of improving the operating ratio, but there is only so much you can do. Not a stock that he would be particularly attracted to right now. Doesn’t think it has a lot of wind at its back.

COMMENT
COMMENT
January 19, 2015

One of the drivers in Canada on the rails has been the shipping of oil. To see this continue, there will have to be some stalling on the new pipeline builds. Also, the pricing of services where they have the 2%-4% increase every year, which would have to continue.

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One of the drivers in Canada on the rails has been the shipping of oil. To see this continue, there will have to be some stalling on the new pipeline builds. Also, the pricing of services where they have the 2%-4% increase every year, which would have to continue.

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