CANADIAN PACIFIC RAILWAY LTD. $66.56 (Toronto symbol CP; Shares outstanding: 169.1 million; Market cap: $11.3 billion; TSINetwork Rating: Average; Dividend yield: 1.6%; www.cpr.ca [1]) reports that its earnings rose 18.3% in 2010, to $650.7 million from $550.0 million in 2009. Earnings per share rose 16.7%, to $3.85 from $3.30, on more shares outstanding.
If you exclude unusual items, such as foreign-exchange losses on CP’s U.S.-dollar-denominated loans and gains on real-estate sales, earnings per share would have risen 54.2%, to $3.87 from $2.51. The latest earnings beat the consensus earnings estimate of $3.80 a share.
CP’s revenue rose 13.2%, to $5.0 billion from $4.4 billion in 2009. The company saw revenue gains from fertilizer (up 53.5%), automotive (up 38.0%), consumer and industrial products (up 14.8%), intermodal (up 12.5%), coal (up 10.6%) and forest products (up 5.0%). Revenue from grain shipments fell 0.1%.
The company’s mechanics’ union may go on strike next month. Canadian National Railway (Toronto symbol CNR) recently reached a new deal with the same union. In the event of a strike, CP’s management plans to keep operating the railway.
CP Rail is a buy.
GEORGE WESTON LTD. $70.96 (Toronto symbol WN; Shares outstanding: 129.7 million; Market cap: $9.2 billion; TSINetwork Rating: Above Average; Dividend yield: 2.1%) has paid out a special, one-time dividend of $7.74751 a share, for a total of about $1 billion.
Weston still holds cash of $4 billion. The company could use its high cash balance to raise its 62% stake in Loblaw. It could also buy smaller bakery companies, or grocery-store chains in western Canada or the U.K. The company may also raise its dividend, or pay another special dividend.
George Weston is still a buy.
BANK OF NOVA SCOTIA $57.67 (Toronto symbol BNS: Shares outstanding: 1.0 billion; Market cap: $59.9 billion; TSINetwork Rating: Above Average; Dividend yield: 3.4%; www.scotiabank.com [2]) has completed the purchase of the 82% of DundeeWealth that it didn’t already own.
The $2.3-billion, cash-and-stock deal doubles the size of Bank of Nova Scotia’s mutual-fund business. It also gives the bank a number of new growth opportunities, including access to DundeeWealth’s high-quality clientele. As well, the bank may sell Dundee’s family of Dynamic mutual funds through its branches in Asia and Latin America.
Bank of Nova Scotia is a buy.