CANADIAN PACIFIC RAILWAY $171.14 - Toronto symbol CP

CANADIAN PACIFIC RAILWAY $171.14 (Toronto symbol CP; Shares outstanding: 175.7 million; Market cap: $29.0 billion; TSINetwork Rating: Average; Dividend yield: 0.8%; www.cpr.ca), transports freight between Montreal and Vancouver, and connects with hubs in the U.S. Midwest and northeast.

In the quarter ended March 31, 2014, CP’s earnings per share rose 16.1%, to $1.44 from $1.24 a year earlier. Revenue increased 0.9%, to $1.51 billion from $1.50 billion.

CP’s operating ratio improved to 72.0% from 75.8% a year ago. (Operating ratio is calculated by dividing regular operating costs by revenue. The lower the ratio, the better.) It continues to benefit from its efficiency improvements, mainly replacing locomotives, improving tracks and adding software that optimizes train loads and speeds.

The company feels it can cut its full-year operating ratio to 65% or less this year It also expects its full-year earnings to rise 30% over 2013, to $8.35 a share. The stock trades at 20.5 times that forecast. That’s a still reasonable p/e ratio, as CP’s efficiency improvements will raise its competitiveness and profits in future years.

Canadian Pacific Railway is still a safety-conscious buy.

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