How Canadian Pacific Railway Stock Has Trended in 2018



Canadian Pacific Railway’s view on 2018

Among all Class I railroad companies, Canadian Pacific Railway (CP) was the only one (XTN) to be highly optimistic in its 2018 outlook, and the company maintains that outlook.

On CP’s Q4 2017 earnings call, CEO Keith E. Creel said, “On the guidance front, we’ve built up momentum through 2017. So looking forward, we’re carrying that momentum into 2018, and this company, again, is poised for another record-setting year. 2018, we’re targeting mid-single-digit revenue growth and EPS growth in the low double digits.”

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Canadian Pacific Railway is also taking measures to reduce its expenses by refinancing its existing debt. The company has ~575.0 million Canadian dollars worth of high-coupon debt maturing in Q2 2018. On May 14, it announced the refinancing of 500.0 million Canadian dollars worth of debt. This refinancing is expected to generate more than 20.0 million Canadian dollars worth of interest expense savings.

CP’s stock price performance

On May 28, Canadian Pacific Railway stock opened at $184.11 on the NYSE, slightly down from the previous trading session’s closing price of $185.0. CP’s present stock price levels are much closer to its 52-week high of $188.8. The stock’s current price level indicates a 22% premium to its 52-week low of $150.91.

Year-to-date, the company’s stock has returned 2%, while in the last year, it’s returned 17%. These returns are much better than rival Canadian National Railway’s (CNI) returns of 1% and 9%, respectively, in the same periods. Let’s see how Canadian Pacific Railway compares to its peers in terms of their returns in the last year:

  • Norfolk Southern (NSC): 25%
  • CSX (CSX): 20%
  • Union Pacific (UNP): 31%
  • Kansas City Southern (KSU): 17%
  • Genesee & Wyoming (GWR): 17%

During the same timeframe, the SPDR S&P Transportation ETF (XTN) delivered a 25% return. XTN holds 13.1% in major railroad companies and 25.2% in key trucking companies in the United States.

In the next article, we’ll consider analysts’ recommendations on CP and its railroad peers.


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