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Relative valuation derived from Industrials sector median benchmarks. Model weights: EV/EBITDA (40%), P/B (35%), P/S (25%). Multiples adjusted for extreme outliers and non-recurring volatility.
Auditing capital efficiency...
Quality Profile Audit
Score: 50GRADE C+
Composite assessment of profitability, capital efficiency, and financial strength. Top-tier entities demonstrate sustainable cash flow generation.
Return on Equity
Profit generated per dollar of shareholder equity
8.3%
Sector: 8.9%
Dividend Analysis audit
GROWTH
0.80%
Trailing Yield
$0.80
Per $100 Invested
Modest dividend — capital prioritized for reinvestment.
Est. Payout Ratio
15%SAFE
Analyst Projections
Analyst Consensus
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Based on our 6-factor quantitative model, CANADIAN PACIFIC KANSAS CITY LTD/CN (CP) receives a "Hold" rating with a composite score of 52.2/100, ranked #635 out of 4446 stocks. Key factor scores: Quality 50/100, Value 68/100, Momentum 51/100. This is quantitative analysis only — not investment advice.
CANADIAN PACIFIC KANSAS CITY LTD/CN (CP) Stock Analysis — April 2026 Rating, Price, and Forecast
Company Overview — What Does CANADIAN PACIFIC KANSAS CITY LTD/CN Do?
Canadian Pacific Railway Limited, together with its subsidiaries, owns and operates a transcontinental freight railway in Canada and the United States. The company transports bulk commodities, including grain, coal, potash, fertilizers, and sulphur; and merchandise freight, such as energy, chemicals and plastics, metals, minerals and consumer, automotive, and forest products. It also transports intermodal traffic comprising retail goods in overseas containers. The company offers rail and intermodal transportation services through a network of approximately 13,000 miles serving business centers in Quebec and British Columbia, Canada; and the United States Northeast and Midwest regions. Canadian Pacific Railway Limited was incorporated in 1881 and is headquartered in Calgary, Canada. CANADIAN PACIFIC KANSAS CITY LTD/CN (CP) is classified as a large-cap stock in the Industrials sector, specifically within the Transportation industry. The company is led by CEO Keith E. Creel and employs approximately 11,800 people, headquartered in CALGARY ALBERTA, Alberta. With a market capitalization of $70.0B, CP is one of the prominent companies in the Industrials sector.
CANADIAN PACIFIC KANSAS CITY LTD/CN (CP) Stock Rating — Hold (April 2026)
As of April 2026, CANADIAN PACIFIC KANSAS CITY LTD/CN receives a Hold rating with a composite score of 52.2/100 and 3 out of 5 stars from the Blank Capital Research quantitative model.CP ranks #635 out of 4,446 stocks in our coverage universe. Within the Industrials sector, CANADIAN PACIFIC KANSAS CITY LTD/CN ranks #110 of 752 stocks, placing it in the top quartile of its Industrials peers. The rating is generated by a multi-factor model that weighs quality (30%), momentum (25%), value (15%), investment (10%), stability (10%), and short interest (10%).
CP Stock Price and 52-Week Range
CANADIAN PACIFIC KANSAS CITY LTD/CN (CP) currently trades at $80.67. The stock lost $0.53 (0.7%) in the most recent trading session. The 52-week high for CP is $88.96, which means the stock is currently trading -9.3% from its annual peak. The 52-week low is $66.49, putting the stock 21.3% above its annual trough. Recent trading volume was 2.9M shares, reflecting moderate market activity.
Is CP Overvalued or Undervalued? — Valuation Analysis
CANADIAN PACIFIC KANSAS CITY LTD/CN (CP) carries a value factor score of 68/100 in the Blank Capital model, indicating fair valuation relative to historical norms. The trailing price-to-earnings ratio is 18.80x, compared to the Industrials sector average of 28.33x — a discount of 34%. The price-to-book ratio stands at 1.56x, versus the sector average of 2.23x. The price-to-sales ratio is 4.98x, compared to 0.50x for the average Industrials stock. On an enterprise value basis, CP trades at 14.09x EV/EBITDA, versus 5.70x for the sector.
Overall, CP's valuation appears roughly in line with sector benchmarks, suggesting the market is pricing the stock fairly given its current fundamentals and growth trajectory. Neither deep value nor significantly overpriced, the stock occupies a middle ground on valuation.
CANADIAN PACIFIC KANSAS CITY LTD/CN Profitability — ROE, Margins, and Quality Score
CANADIAN PACIFIC KANSAS CITY LTD/CN (CP) earns a quality factor score of 50/100, indicating solid business quality with consistent operational execution. The return on equity (ROE) is 8.3%, compared to the Industrials sector average of 8.9%, which is below typical expectations for high-quality companies. Return on assets (ROA) comes in at 4.5% versus the sector average of 3.3%.
On a margin basis, CANADIAN PACIFIC KANSAS CITY LTD/CN reports gross margins of 72.0%, compared to 35.8% for the sector. The operating margin is 35.4% (sector: 6.2%). Net profit margin stands at 26.5%, versus 3.9% for the average Industrials stock. Revenue growth is running at 1.6% on a trailing basis, compared to 6.4% for the sector. The overall profitability profile is adequate, though there may be room for margin expansion.
CP Debt, Balance Sheet, and Financial Health
CANADIAN PACIFIC KANSAS CITY LTD/CN has a debt-to-equity ratio of 84.0%, compared to the Industrials sector average of 70.0%. Leverage is within a manageable range for the industry, though investors should monitor debt trends over time. The current ratio is 0.49x, which may signal near-term liquidity tightness. Total debt on the balance sheet is $17.15B. Cash and equivalents stand at $295M.
CP has a beta of 0.67, meaning it is less volatile than the S&P 500, making it a relatively defensive holding. The stability factor score for CANADIAN PACIFIC KANSAS CITY LTD/CN is 87/100, indicating low-volatility characteristics and consistent price behavior that appeals to risk-averse investors.
CANADIAN PACIFIC KANSAS CITY LTD/CN Revenue and Earnings History — Quarterly Trend
In TTM 2026, CANADIAN PACIFIC KANSAS CITY LTD/CN reported revenue of $14.70B and earnings per share (EPS) of $4.52. Net income for the quarter was $3.90B. Gross margin was 72.0%. Operating income came in at $5.20B.
In FY 2025, CANADIAN PACIFIC KANSAS CITY LTD/CN reported revenue of $15.08B and earnings per share (EPS) of $4.52. Net income for the quarter was $4.14B. Revenue grew 49.3% year-over-year compared to FY 2024. Operating income came in at $5.61B.
In Q3 2025, CANADIAN PACIFIC KANSAS CITY LTD/CN reported revenue of $3.66B and earnings per share (EPS) of $1.01. Net income for the quarter was $917M. Revenue grew 3.2% year-over-year compared to Q3 2024. Operating income came in at $1.34B.
In Q2 2025, CANADIAN PACIFIC KANSAS CITY LTD/CN reported revenue of $3.70B and earnings per share (EPS) of $1.34. Net income for the quarter was $1.23B. Revenue grew 2.7% year-over-year compared to Q2 2024. Operating income came in at $1.34B.
Over the past 8 quarters, CANADIAN PACIFIC KANSAS CITY LTD/CN has demonstrated a growth trajectory, with revenue expanding from $3.60B to $14.70B. Investors analyzing CP stock should weigh these quarterly trends alongside the valuation and quality metrics discussed above.
CP Dividend Yield and Income Analysis
CANADIAN PACIFIC KANSAS CITY LTD/CN (CP) currently pays a dividend yield of 0.8%. At this yield, a $10,000 investment in CP stock would generate approximately $$80.00 in annual dividend income. With a net margin of 26.5%, the dividend appears well-covered by earnings, suggesting sustainable payouts going forward.
CP Momentum and Technical Analysis Profile
CANADIAN PACIFIC KANSAS CITY LTD/CN (CP) has a momentum factor score of 51/100, reflecting neutral trend characteristics. The stock is neither significantly outperforming nor underperforming the broader market on a momentum basis. The investment factor score is 33/100, which measures capital allocation efficiency and asset growth patterns. The short interest score of 23/100 signals elevated short interest, which can indicate bearish sentiment among institutional investors.
CP vs Competitors — Industrials Sector Ranking and Peer Comparison
Comparing CP against the S&P 500 benchmark is also instructive for understanding relative performance. Investors can view the full CP vs S&P 500 (SPY) comparison to assess how CANADIAN PACIFIC KANSAS CITY LTD/CN stacks up against the broader market across all factor dimensions.
CP Next Earnings Date
No upcoming earnings date has been announced for CANADIAN PACIFIC KANSAS CITY LTD/CN (CP) at this time. Check the earnings calendar for the latest scheduling updates across all stocks in our coverage universe.
Should You Buy CP? — Investment Thesis Summary
CANADIAN PACIFIC KANSAS CITY LTD/CN presents a balanced picture with arguments on both sides. The value score of 68/100 suggests attractive pricing relative to fundamentals. Low volatility (stability score 87/100) reduces downside risk.
In summary, CANADIAN PACIFIC KANSAS CITY LTD/CN (CP) earns a Hold rating with a composite score of 52.2/100 as of April 2026. The rating is derived from the Blank Capital Research methodology, which combines six factor dimensions into a single quantitative ranking. Investors should consider these quantitative signals alongside their own fundamental research, risk tolerance, and investment time horizon before making buy or sell decisions on CP stock.
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Institutional Research Dossier
CANADIAN PACIFIC KANSAS CITY LTD/CN (CP) Deep Dive Analysis
Published on March 24, 2026
Action RatingHold
Sections
Executive Summary
We maintain a Hold rating on Canadian Pacific Kansas City (CP), driven by a balanced view of its strategic advantages and financial performance against valuation concerns. The acquisition of Kansas City Southern has created the first single-line rail network linking Canada, the United States, and Mexico, offering significant long-term growth opportunities. However, the integration process and the substantial debt incurred to finance the acquisition present near-term challenges that temper our enthusiasm.
CP's operational efficiency, strong pricing power, and exposure to diverse commodity markets provide a solid foundation. Yet, the current valuation, while seemingly attractive relative to the sector on certain metrics, reflects the market's anticipation of future synergies and growth, leaving limited margin for error. Investors should carefully weigh the potential benefits of the CPKC merger against the execution risks and financial leverage before considering a more aggressive position.
Business Strategy & Overview
Canadian Pacific Kansas City (CP) operates a transcontinental freight railway, transporting a diverse range of commodities and merchandise across Canada, the United States, and Mexico. The company's primary revenue streams are derived from hauling bulk commodities like grain, coal, potash, and fertilizers, as well as merchandise freight including energy products, chemicals, metals, and automotive products. Intermodal traffic, which involves transporting retail goods in overseas containers, also contributes significantly to CP's top line.
The acquisition of Kansas City Southern (KCS) is the cornerstone of CP's current business strategy. This merger creates a unique single-line rail network connecting North America's three largest economies, eliminating interchange points and promising faster, more reliable service for customers. CP anticipates significant revenue synergies from cross-border trade and increased market share in key segments. The integration of KCS is a complex undertaking, requiring substantial investment in infrastructure upgrades and operational alignment.
CP's strategic positioning emphasizes operational efficiency and customer service. The company has invested heavily in technology and infrastructure to improve network capacity, reduce transit times, and enhance safety. Its precision scheduled railroading (PSR) model focuses on optimizing asset utilization and minimizing costs. This approach has contributed to CP's industry-leading operating ratio, a key metric of profitability for railroads.
Looking ahead, CP aims to capitalize on the growing demand for rail transportation driven by increasing trade flows and supply chain diversification. The company is actively pursuing new business opportunities in areas such as automotive, energy, and agriculture. CP is also committed to sustainability, investing in fuel-efficient locomotives and exploring alternative energy sources to reduce its carbon footprint. The success of CP's strategy hinges on its ability to effectively integrate KCS, capture the anticipated synergies, and maintain its operational excellence.
Execution Benchmarks audit
Revenue Growth
YOY expansion rate
1.6%
Sector: 6.4%
-75% VS SCTR
Economic Moat Analysis
Canadian Pacific Kansas City possesses a Narrow economic moat, primarily derived from its efficient scale and network effects. The railroad industry, in general, benefits from high barriers to entry due to the significant capital investment required to build and maintain rail infrastructure. The existing rail networks represent a sunk cost that deters new entrants, creating a natural oligopoly.
CP's efficient scale advantage stems from its ability to operate a large, integrated network at a lower cost per unit than smaller competitors. The company's investments in technology and infrastructure have further enhanced its operational efficiency, allowing it to offer competitive pricing and reliable service. The merger with Kansas City Southern strengthens this advantage by creating a more extensive and efficient network, reducing interchange costs and transit times.
Network effects also contribute to CP's moat. As the number of customers using CP's network increases, the value of the network to each customer also increases. This is because a larger network provides greater connectivity and access to more markets. The CPKC merger significantly expands the company's network, enhancing its attractiveness to shippers and strengthening its competitive position.
However, CP's moat is not as wide as some of its peers due to the presence of other large, well-established railroads in North America. Competition from companies like Union Pacific and BNSF Railway limits CP's pricing power and market share potential. Moreover, the railroad industry is subject to regulatory oversight, which can impact profitability and investment decisions. While CP's efficient scale and network effects provide a competitive advantage, these factors are not insurmountable, and the company must continuously innovate and improve its operations to maintain its position.
Financial Health & Profitability
CP's financial health presents a mixed picture. The company exhibits strong profitability metrics, with a gross margin of 72.0%, an operating margin of 35.4%, and a net margin of 26.5%, all significantly exceeding the sector averages of 35.8%, 6.2%, and 3.7%, respectively. This indicates CP's ability to efficiently manage its operations and generate substantial profits from its revenue. However, the company's revenue growth of 1.6% is significantly lower than the sector average of 6.6%, suggesting potential challenges in expanding its top line.
The balance sheet reveals a high level of debt, with a total debt of $17.15 billion and a debt-to-equity ratio of 84.00, exceeding the sector average of 70.00. This increased leverage is primarily attributable to the financing of the Kansas City Southern acquisition. While the acquisition is expected to generate significant synergies and growth opportunities, the high debt burden poses a risk, particularly if the integration process encounters unforeseen challenges or if economic conditions deteriorate.
CP's free cash flow (FCF) is a concern, with a TTM value of -$466.45 million. This negative FCF is likely due to the significant capital expenditures associated with the KCS integration and infrastructure upgrades. The company's current ratio of 0.49 indicates a potential liquidity risk, as its current assets are less than its current liabilities. However, CP's strong profitability and access to capital markets mitigate this risk to some extent.
Analyzing the quarterly financial history reveals a consistent trend of strong operating margins, ranging from 29.7% to 37.2% over the past several quarters. Net income has also remained relatively stable, although there have been fluctuations in EPS due to changes in the company's share count. The financial performance in FY2025 shows a significant increase in revenue and net income compared to FY2024, reflecting the initial impact of the KCS acquisition. However, the long-term financial health of CP will depend on its ability to successfully integrate KCS, deleverage its balance sheet, and generate sustainable FCF.
Valuation Assessment
CP's valuation presents a complex picture. The company's P/E ratio of 17.3x is significantly lower than the sector average of 27.7x, suggesting that the stock may be undervalued relative to its earnings. Similarly, its EV/EBITDA ratio of 3.1x is also lower than the sector average of 5.7x, further supporting the notion of undervaluation. However, these metrics must be interpreted with caution, as they reflect the market's expectations for future growth and synergies from the KCS acquisition.
The negative free cash flow (FCF) makes it difficult to assess CP's valuation using traditional FCF-based metrics. The market is essentially pricing in the anticipated future FCF generation that will result from the KCS integration and the realization of synergies. If these synergies fail to materialize or if the integration process takes longer than expected, the stock could be significantly overvalued.
Given the uncertainties surrounding the KCS integration, a relative valuation approach may be more appropriate. Comparing CP's valuation multiples to those of its peers, such as Union Pacific and BNSF Railway, can provide insights into whether the stock is trading at a premium or discount. However, it is important to consider the specific characteristics of each company, such as its growth prospects, profitability, and financial leverage.
Overall, CP's valuation appears to be fair, reflecting the market's anticipation of future growth and synergies. However, the stock is not necessarily a bargain, as the current price already incorporates a significant amount of optimism. Investors should carefully assess the risks and uncertainties associated with the KCS integration before making an investment decision. A more conservative approach would be to wait for further evidence of successful integration and synergy realization before taking a more aggressive position.
Risk & Uncertainty
The primary risk facing Canadian Pacific Kansas City is the successful integration of Kansas City Southern. The merger is complex, involving the alignment of different operating systems, cultures, and regulatory environments. Any delays or setbacks in the integration process could negatively impact the company's financial performance and growth prospects. The anticipated synergies from the merger may not materialize to the extent expected, leading to a lower return on investment.
Regulatory risks also pose a significant threat. The railroad industry is subject to extensive regulation, including safety standards, environmental regulations, and antitrust laws. Changes in these regulations could increase CP's operating costs or limit its ability to compete effectively. The Surface Transportation Board (STB) has the authority to review and approve railroad mergers, and any future regulatory actions could impact CP's business.
Economic risks are another concern. CP's business is sensitive to economic cycles, as demand for rail transportation is closely correlated with economic activity. A slowdown in economic growth could reduce demand for CP's services, leading to lower revenue and profits. Fluctuations in commodity prices, particularly for grain, coal, and energy products, can also impact CP's financial performance.
Finally, competition from other railroads and trucking companies poses a constant threat. CP operates in a competitive market, and its ability to maintain its market share and pricing power depends on its ability to provide reliable and cost-effective service. Increased competition could put pressure on CP's margins and profitability. The company's high debt burden also increases its financial risk, as it must generate sufficient cash flow to service its debt obligations.
Bulls Say / Bears Say
The Bull Case
BULL VIEWThe CPKC merger creates the first single-line rail network connecting North America, unlocking significant revenue synergies and competitive advantages.
BULL VIEWCP's operational efficiency and precision scheduled railroading (PSR) model drive industry-leading operating ratios and profitability.
BULL VIEWThe company's diverse commodity mix and exposure to growing markets provide a solid foundation for long-term growth.
The Bear Case
BEAR VIEWThe high debt burden incurred to finance the KCS acquisition poses a significant risk, particularly if the integration process encounters unforeseen challenges.
BEAR VIEWThe anticipated synergies from the CPKC merger may not materialize to the extent expected, leading to a lower return on investment.
BEAR VIEWRegulatory risks and increased competition could put pressure on CP's margins and profitability.
About the Author
Marques Blank
Founder & Chief Investment Officer, Blank Capital
Marques brings 15 years of institutional finance and investing experience, having overseen financial planning for a $1.6B defense business unit. He developed the proprietary 6-factor quantitative model used to score CP and 4,400+ other equities.
CANADIAN PACIFIC KANSAS CITY LTD/CN exhibits a 245% valuation premium relative to institutional benchmarks. This represents a potential valuation overextension based on current multiples.
Return on Assets
Efficiency of asset utilization
4.5%
Sector: 3.3%
Gross Margin
Pricing power and cost efficiency
72.0%
Sector: 35.8%
Operating Margin
Core business profitability
35.4%
Sector: 6.2%
Net Margin
Bottom-line profitability
26.5%
Sector: 3.9%
Factor Methodology
The Quality factor evaluates the persistence and magnitude of cash flows. Companies with scores >70 exhibit superior competitive moats and financial resilience through economic cycles.
Sector Avg Yield0.00%
Yield Delta—
Income Projection audit
A $10,000 investment would generate approximately $80 annually in dividends at the current trailing rate.
