CP Intrinsic Value Calculation – Canadian Pacific Railway Reports Fourth Quarter FY2022 Earnings Results on January 31 2023.
March 20, 2023
Earnings Overview
On January 31 2023, Canadian Pacific Railway ($TSX:CP) reported their fourth quarter earnings results for FY2022 ending December 31 2022. They experienced a total revenue growth of 139.6% from the same quarter the prior year, amounting to CAD 1.3 billion. Similarly, their net income increased 20.6% year over year to CAD 2.5 billion.
Market Price
The announcement saw CP’s stock open at CA$103.9 and close at CA$105.0, up 1.4% from the prior closing price of 103.6. This increase in stock price was due to strong results from the railway’s quarter. This was largely due to higher volumes and increased pricing of their coal and grain shipments, as well as increased shipping activity in their intermodal segment. This increase in net income was primarily due to higher operating expenses and lower taxes being paid.
CP’s strong fourth quarter performance has been welcomed by investors, with the overall market response being positive. With these results, the railway has reaffirmed its commitment to providing its customers with high quality services and creating value for its shareholders. Live Quote…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for CP. More…
| Total Revenues | Net Income | Net Margin |
| 8.81k | 3.52k | 40.7% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for CP. More…
| Operations | Investing | Financing |
| 4.14k | -1.5k | -2.3k |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for CP. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 73.5k | 34.61k | 41.79 |
Key Ratios Snapshot
Some of the financial key ratios for CP are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 4.2% | 1.6% | 54.4% |
| FCF Margin | ROE | ROA |
| 29.3% | 7.8% | 4.1% |
Analysis – CP Intrinsic Value Calculation
At GoodWhale, we’ve been analyzing the financials of CANADIAN PACIFIC RAILWAY and our proprietary Valuation Line calculates that the fair value for CANADIAN PACIFIC RAILWAY stock is around CA$83.0. Currently, CANADIAN PACIFIC RAILWAY stock is being traded at CA$105.0, which means it is overvalued by 26.5%. We believe that this represents an opportunity to buy CANADIAN PACIFIC RAILWAY stock at a discounted price. Our Valuation Line is regularly updated and can provide investors with valuable insight into the financials of the company and help them make informed decisions about when to buy or sell stock. More…
Peers
The company was founded in 1881 and is headquartered in Calgary, Alberta. The Canadian Pacific Railway is the second largest railway company in North America by revenue, after Union Pacific Corporation. The company’s main competitors are CSX Corporation, Canadian National Railway Company, and Union Pacific Corporation.
– CSX Corp ($NASDAQ:CSX)
CSX Corp is a publicly traded company with a market capitalization of $61.1 billion as of 2022. The company has a return on equity of 29.02%. CSX Corp is a diversified transportation company that provides rail, intermodal, and coal transportation services throughout the United States. The company operates approximately 21,000 route miles of track and serves more than 2,000 customers. CSX Corp’s customers include major shippers, such as General Electric, Procter & Gamble, and Ford Motor Company.
– Canadian National Railway Co ($TSX:CNR)
Canadian National Railway Co has a market cap of 109.41B as of 2022. The company has a return on equity of 20.67%. It is engaged in the operation of rail transportation services in Canada and the United States.
– Union Pacific Corp ($NYSE:UNP)
Union Pacific Corporation is an American railroad conglomerate based in Omaha, Nebraska that operates 8,300 locomotives over 32,200 miles of track in 23 states west of Chicago and New Orleans. Union Pacific is the largest railroad in North America by revenue and the largest employer in Omaha.
Summary
Investors have been looking favorably at Canadian Pacific Railway following their strong fourth quarter earnings report for FY2022. Total revenues increased by 139.6%, and net income rose 20.6% year-over-year. This signifies a healthy growth in their operations, potentially indicating that investing in Canadian Pacific Railway may be a good option.
In addition, their cash flow has remained positive, and their liquidity position is sound. These metrics are all encouraging signs for investors looking to take advantage of this potential opportunity.
