Why Is Canadian Pacific Kansas City (CP) Up 3.7% Since Last Earnings Report?

It has been about a month since the last earnings report for Canadian Pacific Kansas City (CP). Shares have added about 3.7% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Canadian Pacific Kansas City due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important catalysts.

CP's Q2 Earnings Miss Estimates

Canadian Pacific Kansas City reported unimpressive second-quarter 2025 results, wherein both earnings and revenues missed the Zacks Consensus Estimate.

The quarterly earnings (excluding 15 cents from non-recurring items) of 81 cents per share missed the Zacks Consensus Estimate by 1.2%. The bottom line improved 5.2% on a year-over-year basis. Operating revenues of $2.67 billion lagged the Zacks Consensus Estimate by 4.3%. However, the top line improved 1.5% on a year-over-year basis.

In the reported quarter, total Freight revenues per revenue ton miles decreased 4% year over year. Total Freight revenues per carload declined 3% year over year.

On a reported basis, operating income increased 6%. Total operating expenses grew 0.9% year over year. The reported operating ratio (operating expenses as a percentage of revenues) fell 110 basis points to 63.7% from 64.8% in the year-ago quarter.

CP’s Segmental Highlights

Freight revenues, accounting for 98.1% of the top line, increased 2.7%. CP’s Freight segment contains Grain (up 12%), Coal (up 8%), Potash (down 7%), Energy, chemicals and plastics (up 2%), Metals, minerals and consumer products (down 20%), Automotive (down 28%) and Intermodal (up 9%). Meanwhile, Fertilizers and Sulphur, and Forest products fell 5% and 8%, respectively.

Other revenues increased 1.3% year over year in the second quarter of 2025.

CP’s Liquidity

CP exited the second quarter with cash and cash equivalents of C$799 million compared with C$739 million at the end of the December-end quarter of 2024. Long-term debt amounted to C$21.23 billion compared with C$19.8 billion at the end of the fourth quarter of 2024.

CP’s Outlook

Despite the ongoing tariff and trade policy uncertainty, Canadian Pacific Kansas City now expects 2025 core adjusted combined diluted earnings per share to grow in the 10-14% range from the 2024 actuals to C$4.25 per share.

The company continues to expect 2025 RTMs to increase in the mid-single digits from the 2024 actuals.

Management expects capital expenditures to be C$2.9 billion for the full year. The core adjusted effective tax rate for 2025 is expected to be 24.5%.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

VGM Scores

Currently, Canadian Pacific Kansas City has a subpar Growth Score of D, a score with the same score on the momentum front. Following the exact same course, the stock was allocated a score of D on the value side, putting it in the bottom 40% for value investors.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, 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 is part of the Zacks Transportation - Rail industry. Over the past month, Union Pacific (UNP), a stock from the same industry, has gained 0.2%. The company reported its results for the quarter ended June 2025 more than a month ago.

Union Pacific reported revenues of $6.15 billion in the last reported quarter, representing a year-over-year change of +2.4%. EPS of $3.03 for the same period compares with $2.74 a year ago.

For the current quarter, Union Pacific is expected to post earnings of $2.97 per share, indicating a change of +8% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.6% over the last 30 days.

Union Pacific has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.

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This article originally published on Zacks Investment Research (zacks.com).

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