CP Stock Forecast & Price Target

Canadian Pacific Kansas City (CPKC) has demonstrated a positive financial trajectory, with revenue increasing by 2.7% year-over-year, largely attributed to a robust 6.5% rise in revenue ton miles (RTMs), despite a compression in yield. The company has also seen a modest improvement in its leverage ratio to 3.0x while maintaining a strong free cash flow of $605 million, even amid significant share buybacks totaling $1.4 billion. Notably, the rise in grain volumes by 11% year-over-year and substantial growth in domestic intermodal traffic, highlighted by a 40% increase in volumes from the MMX service, provides further evidence of strong demand fundamentals that are likely to support future growth.

Canadian Pacific Kansas City's operating income increased by 5.4% year-over-year; however, it missed expectations by approximately 2.5% due to yield pressures and systems integration challenges that had a negligible effect on the operating ratio, which stood at 60.7%. Forecasts for earnings per share (EPS) have been revised downward for 2026 and 2027, largely reflecting an anticipated decline in volume growth and the negative impact of recent integration issues on revenue. Additionally, a significant 8% decrease in quarter-to-date volumes, compounded by tariff effects and overall economic volatility, raises concerns about the company's near-term growth prospects and financial stability.