The Successful Investor Hotline – Friday, October 26, 2012

Article Excerpt

CANADIAN PACIFIC RAILWAY LTD., $91.80, Toronto symbol CP, rose 4% this week after it reported better-than-expected quarterly earnings. That’s because the company is starting to benefit from a major plan to improve its efficiency with new locomotives, upgraded tracks and software that optimizes train loads and speeds. In the three months ended September 30, 2012, CP’s earnings rose 19.8%, to $224 million, or $1.30 a share. That easily beat the consensus estimate of $1.23. A year earlier, the company earned $187 million, or $1.10 a share. Revenue rose 8.2%, to $1.45 billion from $1.34 billion. The company saw revenue gains from shipping automotive products (up 31.3%), consumer and industrial products (up 23.7%), coal (up 9.5%), intermodal (up 7.4%) and grain (up 2.1%). Revenue from fertilizer shipments fell 19.0%, while forest products revenue declined 3.9%. CP’s operating ratio improved to 74.1% from 75.8% a year ago. (Operating ratio is calculated by dividing a company’s regular operating costs by its revenue. The lower the ratio,…