CANADIAN PACIFIC KANSAS CITY LTD/CN (CP) Stock Analysis
CANADIAN PACIFIC KANSAS CITY LTD/CN (CP) Stock Analysis
Analysis from 10-Q filed 2025-10-30. Data as of Q4 2025.
Overall Grade: F (Concerning)
CANADIAN PACIFIC KANSAS CITY LTD/CN faces challenges in financial performance that warrant careful analysis.
| Metric | Value | Context |
|---|---|---|
| ROIC | 5.6% | Below expectations |
| FCF Margin | 14.6% | Healthy cash flow |
| Debt/Equity | 0.5x | Conservative leverage |
Investment Thesis: Healthy free cash flow margin of 14.6% provides financial flexibility for growth and shareholder returns.
Explore CANADIAN PACIFIC KANSAS CITY LTD/CN: Earnings History | Filing Intelligence | ROIC Analysis
Profitability: CANADIAN PACIFIC KANSAS CITY LTD/CN earns 5.6% ROIC, Bottom 50% in Transportation
CANADIAN PACIFIC KANSAS CITY LTD/CN's trailing-twelve-month ROIC of 5.6% ranks Bottom 50% in Transportation companies (sector median: 6.7%), driven by NOPAT margin of 28.1% combined with asset turnover of 0.2x. Source: 10-Q filed 2025-10-30.
| Metric | CP | Rating | Context |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 5.6% | Warning | Below sector median of 6.7% |
| Return on Equity (ROE) | 8.9% | Adequate | Moderate equity returns |
| Operating Margin | 37.2% | Excellent | Efficient operations |
Cash Flow: CANADIAN PACIFIC KANSAS CITY LTD/CN generates $2.2B FCF at 14.6% margin, positive NaN/8 quarters
CANADIAN PACIFIC KANSAS CITY LTD/CN generated $2.2B in free cash flow (TTM), a 14.6% FCF margin, a margin that ranks Top 10% in Transportation. Operating cash flow exceeds net income by 1.3x, indicating high earnings quality. FCF was positive in N/A of the last 8 quarters. Source: 10-Q filed 2025-10-30.
| Metric | CP | Rating | Context |
|---|---|---|---|
| Free Cash Flow Margin | 14.6% | Good | Healthy cash generation |
| Free Cash Flow (TTM) | $2.2B | Good | Positive cash generation |
| OCF/Net Income | 1.3x | Excellent | High earnings quality |
| FCF Consistency (8Q) | N/A | Warning | Variable cash flow |
Balance Sheet: CANADIAN PACIFIC KANSAS CITY LTD/CN at 0.5x leverage
CANADIAN PACIFIC KANSAS CITY LTD/CN's debt-to-equity ratio of 0.5x reflects moderate leverage. Total debt of $21.1B offset by $184.0M in cash. Source: 10-Q filed 2025-10-30.
| Metric | CP | Rating | Context |
|---|---|---|---|
| Debt to Equity | 0.5x | Good | Conservative capital structure |
| Net Cash Position | $-20.9B | Warning | Net debt position |
Valuation: CANADIAN PACIFIC KANSAS CITY LTD/CN trades at 16.3x earnings
CANADIAN PACIFIC KANSAS CITY LTD/CN trades at a P/E of 16.3x. Free cash flow yield of 3.3% reflects market expectations for growth.
| Metric | CP | Rating | Context |
|---|---|---|---|
| P/E Ratio | 16.3x | Adequate | Reasonable valuation |
| EV/Sales | 5.8x | Adequate | Growth premium priced in |
| FCF Yield | 3.3% | Adequate | Lower cash yield |
| Dividend Yield | 1.2% | Adequate | Growth focus over income |
Capital Allocation: CANADIAN PACIFIC KANSAS CITY LTD/CN returns 7.0% shareholder yield
CANADIAN PACIFIC KANSAS CITY LTD/CN's total shareholder yield is 7.0% (dividends 1.2% + buybacks 5.8%). Source: 10-Q filed 2025-10-30.
| Metric | CP | Rating | Context |
|---|---|---|---|
| Total Shareholder Yield | 7.0% | Excellent | Dividend + buyback yield combined |
| Buyback Yield | 5.8% | Good | Active share repurchases |
| Total Capital Returned (TTM) | $4.7B | Good | Dividends + buybacks returned to shareholders |
Sector Rankings
| Metric | Value | Percentile | vs Median |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 5.6% | Bottom 50% | 0.8x below |
| Free Cash Flow Margin | 14.6% | Top 10% | 3.9x above |
| Operating Margin | 37.2% | Top 5% | 5.7x above |
| Return on Equity (ROE) | 8.9% | Bottom 50% | 0.8x below |
| P/E Ratio | 16.3x | N/A | - |
Financial Scorecard
| Metric | CP | Rating | Sector Context |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 5.6% | Warning | Bottom 50% of sector (median: 6.7%) |
| Free Cash Flow Margin | 14.6% | Good | Top 10% of sector (median: 3.8%) |
| Debt to Equity Ratio | 46.0% | Good | Moderate leverage |
| P/E Ratio (Price-to-Earnings) | 16.3x | Adequate | Fair value |
| Free Cash Flow Yield | 3.3% | Adequate | Moderate yield |
Frequently Asked Questions
Q: What is CANADIAN PACIFIC KANSAS CITY LTD/CN's Return on Invested Capital (ROIC)?
CANADIAN PACIFIC KANSAS CITY LTD/CN (CP) has a trailing twelve-month Return on Invested Capital (ROIC) of 5.6%. This compares below the sector median of 6.7%. An ROIC below 8% suggests the company may be destroying shareholder value.
Q: What is CANADIAN PACIFIC KANSAS CITY LTD/CN's Free Cash Flow Margin?
CANADIAN PACIFIC KANSAS CITY LTD/CN (CP) has a free cash flow margin of 14.6%, generating $2.2 billion in free cash flow over the trailing twelve months. A FCF margin between 10-20% represents healthy cash generation for most industries.
Q: Is CANADIAN PACIFIC KANSAS CITY LTD/CN stock overvalued or undervalued?
CANADIAN PACIFIC KANSAS CITY LTD/CN (CP) trades at a P/E ratio of 16.3x, which is above the sector median of N/A. The EV/Sales multiple is 5.8x. Free cash flow yield is 3.3%, which is in line with market averages.
Q: Does CANADIAN PACIFIC KANSAS CITY LTD/CN pay a dividend?
CANADIAN PACIFIC KANSAS CITY LTD/CN (CP) currently pays a dividend yield of 1.2%. Including share buybacks, the total shareholder yield is 7.0%. The relatively low yield suggests the company prioritizes growth reinvestment over income distribution.
Q: What is CANADIAN PACIFIC KANSAS CITY LTD/CN's revenue and earnings growth?
CANADIAN PACIFIC KANSAS CITY LTD/CN (CP) grew revenue by 3.7% year-over-year. Earnings per share increased by 12.8% compared to the prior year. Modest growth indicates a mature business with stable demand.
Q: Is CANADIAN PACIFIC KANSAS CITY LTD/CN buying back stock?
CANADIAN PACIFIC KANSAS CITY LTD/CN (CP) repurchased $3.9 billion of stock over the trailing twelve months. This represents a buyback yield of 5.8%.
Q: How does CANADIAN PACIFIC KANSAS CITY LTD/CN compare to competitors in Transportation?
Compared to other companies in Transportation, CANADIAN PACIFIC KANSAS CITY LTD/CN (CP) shows: ROIC of 5.6% is below the sector median of 6.7% (Bottom 44%). FCF margin of 14.6% exceeds the sector median of 3.8% (Top 9% of sector). These rankings are based on MetricDuck's analysis of all Transportation companies with available SEC filings.
Q: What warning signs should I watch for with CANADIAN PACIFIC KANSAS CITY LTD/CN?
CANADIAN PACIFIC KANSAS CITY LTD/CN (CP) shows no major financial warning signs based on current metrics. However, investors should always monitor: 1) Margin compression trends, 2) Cash flow consistency, 3) Debt levels relative to cash generation, and 4) Changes in competitive positioning.
Data Source: Data sourced from 10-Q filed 2025-10-30. TTM metrics as of Q4 2025.
Methodology: Financial metrics calculated from SEC 10-K and 10-Q filings using standardized formulas. Sector comparisons use peer group based on SIC code.
Scope: This analysis covers SEC filing fundamentals — profitability, cash flow, balance sheet, and valuation metrics. For analyst estimates and price targets, consult sell-side research.
This analysis is for informational purposes only and does not constitute investment advice.