Canadian Pacific Railway Ltd
TSX:CP
Intrinsic Value
The intrinsic value of one
CP
stock under the Base Case scenario is
119.06
CAD.
Compared to the current market price of 107.9 CAD,
Canadian Pacific Railway Ltd
is
Undervalued by 9%.
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Fundamental Analysis
Despite management’s optimism on the Kansas City Southern integration, any missteps in combining cross-border operations could lead to higher-than-anticipated costs and weaker synergies, putting pressure on long-term profitability.
A downturn in key freight categories, particularly grain and energy-related shipments, poses a serious risk to Canadian Pacific’s top-line growth, given its reliance on these commodities for a significant portion of revenue.
Rising capital expenditure requirements—such as track upgrades and locomotive modernizations—combined with higher interest rates could strain free cash flow, limiting the company’s ability to pursue additional expansion or strategic initiatives.
The acquisition of Kansas City Southern provides a unique single-line network spanning Canada through the U.S. into Mexico, potentially unlocking expansive new freight corridors and revenue growth opportunities.
Canadian Pacific’s consistent improvements in its operating ratio demonstrate effective cost management, which could position the company to capitalize on increasing volume demand without disproportionately raising expenses.
Strong structural positioning in Western Canada’s commodity hub allows CP to benefit from favorable long-term trends such as growing potash and agricultural exports, bolstering network utilization and profitability.
Revenue & Expenses Breakdown
Canadian Pacific Railway Ltd
Earnings Waterfall
Canadian Pacific Railway Ltd
Wall St
Price Targets
CP Price Targets Summary
Canadian Pacific Railway Ltd
According to Wall Street analysts, the average 1-year price target for
CP
is 124.97 CAD
with a low forecast of 113.63 CAD and a high forecast of 138.78 CAD.
The intrinsic value of one
CP
stock under the Base Case scenario is
119.06
CAD.
Compared to the current market price of 107.9 CAD,
Canadian Pacific Railway Ltd
is
Undervalued by 9%.
