Canadian Pacific Railway Ltd

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CP : NYSE : Services
$146.36 -0.16 | -0.11%
Today's Range: 145.12 - 147.13
Avg. Daily Volume: 782,000
09/26/16 - 4:02 PM ET

Financial Analysis


CANADIAN PACIFIC RAILWAY LTD's gross profit margin for the second quarter of its fiscal year 2016 is essentially unchanged when compared to the same period a year ago. Sales and net income have dropped, underperforming the average competitor within its industry. CANADIAN PACIFIC RAILWAY LTD has very weak liquidity. Currently, the Quick Ratio is 0.46 which clearly shows a lack of ability to cover short-term cash needs. The liquidity decreased from the same period a year ago, despite already having weak liquidity to begin with. This would indicate deteriorating cash flow.

During the same period, stockholders' equity ("net worth") has decreased by 10.66% from the same quarter last year. The key liquidity measurements indicate that the company is in a position in which financial difficulties could develop in the near future.

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Income Statement Q2 FY16 Q2 FY15
Net Sales ($mil)1450.01651.0
EBITDA ($mil)712.0791.0
EBIT ($mil)551.0646.0
Net Income ($mil)328.0390.0


Balance Sheet Q2 FY16 Q2 FY15
Cash & Equiv. ($mil)92.0185.0
Total Assets ($mil)19068.017390.0
Total Debt ($mil)8581.06701.0
Equity ($mil)4691.05251.0


Profitability Q2 FY16 Q2 FY15
Gross Profit Margin49.147.91
EBITDA Margin49.147.91
Operating Margin38.039.13
Sales Turnover0.340.39
Return on Assets7.918.97
Return on Equity32.1829.72
Debt Q2 FY16 Q2 FY15
Current Ratio0.640.85
Debt/Capital0.650.56
Interest Expense115.084.0
Interest Coverage4.797.69


Share Data Q2 FY16 Q2 FY15
Shares outstanding (mil)148.4161.3
Div / share0.390.28
EPS2.152.36
Book value / share31.6132.55
Institutional Own % n/a n/a
Avg Daily Volume786187.01112575.0

Valuation


BUY. This stock's P/E ratio indicates a discount compared to an average of 17.31 for the Road & Rail industry and a significant discount compared to the S&P 500 average of 25.19. Conducting a second comparison, its price-to-book ratio of 4.67 indicates a significant premium versus the S&P 500 average of 2.82 and a premium versus the industry average of 3.49. The current price-to-sales ratio is well above the S&P 500 average and above the industry average, indicating a premium.


Price/Earnings
1 2 3 4 5
premium   discount
  Price/Cash Flow
1 2 3 4 5
premium   discount
CP 15.10 Peers 17.31   CP 10.61 Peers 9.67

Discount. A lower P/E ratio than its peers can signify a less expensive stock or lower growth expectations.

CP is trading at a discount to its peers.

 

Average. The P/CF ratio, a stock’s price divided by the company's cash flow from operations, is useful for comparing companies with different capital requirements or financing structures.

CP is trading at a valuation on par to its peers.

 
Price/Projected
Earnings
1 2 3 4 5
premium   discount
  Price to
Earnings/Growth
1 2 3 4 5
premium   discount
CP 12.02 Peers 20.50   CP 0.58 Peers 4.36

Discount. A lower price-to-projected earnings ratio than its peers can signify a less expensive stock or lower future growth expectations.

CP is trading at a significant discount to its peers.

 

Discount. The PEG ratio is the stock’s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples.

CP trades at a significant discount to its peers.

 
Price/Book
1 2 3 4 5
premium   discount
  Earnings Growth
1 2 3 4 5
lower   higher
CP 4.67 Peers 3.49   CP 6.07 Peers -1.21

Premium. A higher price-to-book ratio makes a stock less attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet.

CP is trading at a significant premium to its peers.

 

Higher. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios.

CP is expected to have an earnings growth rate that significantly exceeds its peers.

 
Price/Sales
1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
CP 3.41 Peers 3.18   CP -4.59 Peers -6.81

Average. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales.

CP is trading at a valuation on par with its industry on this measurement.

 

Higher. A sales growth rate that exceeds the industry implies that a company is gaining market share.

CP has a sales growth rate that significantly exceeds its peers.

 

 

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