CANADIAN PACIFIC RAILWAY $159.03 (Toronto symbol CP; Shares outstanding: 153.8 million; Market cap: $25.5 billion; TSINetwork Rating: Above Average; Yield: 0.9%; www.cpr.ca) reported 5.9% lower freight volumes in the latest quarter, mainly because of falling prices for oil, minerals and other commodities. In the three months ended December 31, 2015, CP earned $419 million, down 8.9% from $460 million a year earlier. However, per-share earnings gained 1.5%, to $2.72 from $2.68, on fewer shares outstanding. Revenue fell 4.1%, to $1.69 billion from $1.76 billion. Still, revenue from forest products jumped 20.4%, and fertilizer shipments rose 18.0%. CP is benefiting from greater efficiency, which includes speeding up trains and cutting time spent at terminals. Its operating ratio was a record 59.8% in the latest quarter, the same as a year ago. (Operating ratio is calculated by dividing regular operating costs by revenue. The lower the ratio, the better.) Job cuts are another part of CP’s improving efficiency. Since 2012, it has reduced its workforce by 7,000 positions; it ended 2015 with 12,943 workers. Due to lower commodity demand, CP still plans to cut 1,000 more jobs in 2016. It will also reduce its capital spending, to $1.1 billion in 2016 from $1.5 billion in 2015. CP expects this year’s earnings per share to rise at least 10%, to $11.11. The stock trades at a moderate 14.3 times that forecast. CP Rail is a buy.
Canadian Pacific Railway $159.03 - Toronto symbol CP
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