CP Stock Forecast & Price Target

Canadian Pacific Kansas City's revenue growth of 2.7% year-over-year, along with a 6.5% increase in revenue ton miles (RTMs), indicates a strong operational performance driven by improvements in intermodal, grain, and potash shipments. The company's leverage ratio improved to 3.0x, even with significant share buybacks of $1.4 billion, and free cash flow rose to $605 million, showcasing robust financial health and capital management. Additionally, the expectation of stable Canadian grain crop levels in line with historical averages, coupled with increased domestic intermodal volumes from successful new services, suggests favorable long-term growth prospects for CPKC.

Canadian Pacific Kansas City (CPKC) has exhibited operating income growth of only 5.4% year-over-year, falling short of expectations by approximately 2.5%, largely due to yield headwinds that negatively affected its operating ratio, which stands at 60.7%. The company has revised its earnings per share (EPS) estimates downward for 2025, 2026, and 2027, primarily resulting from integration issues related to the Kansas City Southern merger and declining volume growth, with a notable 8% decrease in quarterly volumes. Additionally, external factors such as tariffs, severe weather conditions, and economic volatility pose significant risks that could further hinder CPKC's financial performance and operational efficiency.