It has been about a month since the last earnings report for Canadian Pacific Kansas City (CP). Shares have lost about 0.7% 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? Well, first let's take a quick look at its most recent earnings report in order to get a better handle on the recent drivers for Canadian Pacific Kansas City Limited before we dive into how investors and analysts have reacted as of late.
CP's Q3 Earnings Miss Estimates
Canadian Pacific Kansas City reported unimpressive third-quarter 2025 results, wherein both earnings and revenues missed the Zacks Consensus Estimate.
The quarterly earnings (excluding 7 cents from non-recurring items) of 80 cents per share missed the Zacks Consensus Estimate by a penny. The bottom line improved 9.5% on a year-over-year basis. Operating revenues of $2.65 billion lagged the Zacks Consensus Estimate of $2.67 billion. However, the top line improved 2.2% on a year-over-year basis.
In the reported quarter, total Freight revenues per revenue ton miles decreased 1% year over year. Total Freight revenues per carload declined marginally year over year.
On a reported basis, operating income increased 11%. Total operating expenses fell 1% year over year. The reported operating ratio (operating expenses as a percentage of revenues) fell 260 basis points to 63.5% from the year-ago quarter.
CP’s Segmental Highlights
Freight revenues, which accounted for 98% of the top line, increased 4% year over year. CP’s Freight segment contains Grain (up 4%), Coal (up 3%), Potash (up 15%), Fertilizers and Sulphur (up 11%), Metals, minerals and consumer products (up 2%), Automotive (up 2%) and Intermodal (up 7%). Meanwhile, Energy, chemicals and plastics, and Forest products fell 2% and 3%, respectively.
Other revenues decreased 18% year over year in the third quarter of 2025.
CP’s Liquidity
CP exited the third quarter with cash and cash equivalents of C$411 million compared with C$799 million at the end of the prior quarter. Long-term debt amounted to C$21.59 billion compared with C$21.22 billion at the end of the prior quarter.
CP’s Outlook
Despite the ongoing tariff and trade policy uncertainty, Canadian Pacific expects 2025 core adjusted 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?
In the past month, investors have witnessed a flat trend in estimates review.
VGM Scores
At this time, Canadian Pacific Kansas City has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. Charting a somewhat similar path, 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 F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Canadian Pacific Kansas City has a Zacks Rank #4 (Sell). We expect a below average 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, Norfolk Southern (NSC), a stock from the same industry, has gained 3%. The company reported its results for the quarter ended September 2025 more than a month ago.
Norfolk Southern reported revenues of $3.1 billion in the last reported quarter, representing a year-over-year change of +1.7%. EPS of $3.30 for the same period compares with $3.25 a year ago.
For the current quarter, Norfolk Southern is expected to post earnings of $2.88 per share, indicating a change of -5.3% from the year-ago quarter. The Zacks Consensus Estimate has changed -2.6% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #4 (Sell) for Norfolk Southern. Also, the stock has a VGM Score of D.
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Canadian Pacific Kansas City Limited (CP): Free Stock Analysis Report Norfolk Southern Corporation (NSC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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