CANADIAN PACIFIC RAILWAY $151.56 - Toronto symbol CP

CANADIAN PACIFIC RAILWAY $151.56 (Toronto symbol CP; Shares outstanding: 175.1 million; Market cap: $26.4 billion; TSINetwork Rating: Average; Dividend yield: 0.9%; www.cpr.ca), transports freight between Montreal and Vancouver and connects with hubs in the U.S. Midwest and northeast.

In the quarter ended September 30, 2013, CP’s revenue rose 5.7%, to $1.53 billion from $1.45 billion a year earlier. Earnings jumped 144.7%, to $331 million, or $1.88 a share, from $224 million, or $1.31.

CP’s operating ratio improved to 65.9% from 74.1% a year ago. (Operating ratio is calculated by dividing regular operating costs by revenue. The lower the ratio, the better.) The company shipped more goods and made better use of its assets in the latest quarter. CEO Hunter Harrison feels he can cut CP’s operating ratio even further.

The company’s improved efficiency should raise this year’s earnings by more than 40%, to $6.17 a share. The stock trades at 24.6 times that figure. That’s still reasonable in light of CP’s improving profitability, iconic brand and extensive landholdings.

Canadian Pacific Railway is still a safety-conscious buy.

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