Fact based stock research
Canadian Pacific Railway (TSX:CP)

CA13645T1003

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For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".

Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".

Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.

Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.

(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).

(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.

Canadian Pacific Railway stock research in summary

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ANALYSIS: With an Obermatt Combined Rank of 65 (better than 65% compared with investment alternatives), Canadian Pacific Railway (Railroads, Canada) shares have above-average financial characteristics compared with similar stocks. Shares of Canadian Pacific Railway are low in value (priced high) with a consolidated Value Rank of 18 (worse than 82% of alternatives). But they show above-average growth (Growth Rank of 74) and are safely financed (Safety Rank of 73, which means below-average debt burdens). ...read more

RECOMMENDATION: A Combined Rank of 65, is a buy recommendation based on Canadian Pacific Railway's financial characteristics. Investors looking for growth and low financial risk may find this stock attractive. While the company Canadian Pacific Railway exhibits low value (Obermatt Value Rank of 18), which means that the stock price is rather high, it also demonstrates above-average growth (Obermatt Growth Rank of 74). This is a typical case, as high-growth companies are often expensive. Good financing practices (Obermatt Safety Rank of 73) are a double-edged sword: if the company continues growing, low debt limits shareholder returns. But if the company increases its debt, it will also increase risk. In other words, this is an investment on the safer side, despite the above-average price (low value). Obermatt Premium subscribers can further check the stock’s Sentiment Ranks, which also flow into the Obermatt 360° View for investors. ...read more

Latest Obermatt Ranks


360° View^new
Sentiment Rank^new
Value Rank	18
Growth Rank	74
Safety Rank	73
Combined Rank	65

Country	Canada
Industry	Railroads
Index	Low Emissions, Energy Efficient, Human Rights, SDG 13, SDG 3, SDG 5, SDG 8, SDG 9, TSX Composite
Size class	X-Large

19-Dec-2024. Stock data may be delayed. Log in or sign up to get the most recent research.

Further information

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Review the performance ranks of the individual metrics that form each investment strategy.

Research History: Canadian Pacific Railway

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	9	11	20	18
GROWTH
GROWTH	26	26	73	74
SAFETY
SAFETY	57	15	65	73
SENTIMENT
SENTIMENT	n/a	27	57	^new
360° VIEW
360° VIEW	n/a	1	52	^new

Most recent update of the stock research: 19-Dec-2024. Financial reporting date used for calculating ranks: 30-Sep-2024. Stock research history is based on the Obermatt Method. The higher the rank, the better Canadian Pacific Railway is in the corresponding investment strategy.
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Combined financial peformance in Detail

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	9	11	20	18
GROWTH
GROWTH	26	26	73	74
SAFETY
SAFETY	57	15	65	73
COMBINED
COMBINED	14	6	48	65

Last update of combined financial performance: 19-Dec-2024. Stock analysis on combined financial performance: The higher the rank of Canadian Pacific Railway the better the performance.

Value Metrics in Detail

ANALYSIS: With an Obermatt Value Rank of 18 (worse than 82% compared with alternatives), Canadian Pacific Railway shares are significantly more expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, with all four indicators below average for Canadian Pacific Railway. Price-to-Sales is 3 which means that the stock price compared with what market professionals expect for future profits is higher than 97% of comparable companies, indicating a low value concerning Canadian Pacific Railway's sales levels. Price-to-Book Capital (also referred to as market-to-book ratio) also has a low Price-to-Book Rank of 49, which means that both reliable company size indicators, sales, and invested capital cannot explain the high stock price of Canadian Pacific Railway. In addition, the two profit-related value indicators, Price-to-Profit (also referred to as price-earnings, P/E) with a low rank of 35 and Dividend Yield, which is lower than 57% of comparable companies, also make the stock more expensive compared with investment alternatives. ...read more

RECOMMENDATION: The overall picture with a consolidated Value Rank of 18, is a sell recommendation based on Canadian Pacific Railway's stock price compared with the company's operational size and dividend yields. How can market participants pay such a high price for Canadian Pacific Railway? One reason may be that the company is simply too popular. If enough people want a particular stock, its price can exceed reasonable levels. This is often the case for companies offering new and exciting products and everybody wants a piece of the action. Should you pay a lot for a hot stock such as Canadian Pacific Railway? It's risky, and even if the stock price continues to grow because of popular demand, it may return to more typical lower levels later. And that return can be sudden and quick, making it impossible for retail investors to exit on time. Sometimes, high prices are deserved. This is the case when it is justified to believe that the company will dominate a market with high profit margins. It has happened in the past for many technology companies and indeed for commercially successful pharmaceutical discoveries. Sometimes they last, sometimes, they get eaten alive. Canadian Pacific Railway may be such a type of stock. That would mean, retail investors should be careful, only considering investing a small part of their wealth in this exciting category and always being ready to lose more than half, if not all of the investment. We recommend further analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks, including the 360° View, before making an investment decision, which is essential in this case, as the financial indicators are inconclusive. ...read more

VALUE METRICS	2021	2022	2023	2024
PRICE VS. REVENUES (P/S)
PRICE VS. REVENUES (P/S)	2	3	5	3
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	41	21	28	35
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	4	17	49	49
DIVIDEND YIELD
DIVIDEND YIELD	33	50	46	43
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	9	11	20	18

Last update of Value Rank: 19-Dec-2024. Stock analysis on value ratios: The higher the rank, the lower the value ratio of Canadian Pacific Railway; except for dividend yield where the rank is higher, the higher the yield.

Growth Metrics in Detail

ANALYSIS: With an Obermatt Growth Rank of 74 (better than 74% compared with alternatives), Canadian Pacific Railway shows an above-average growth dynamic in its industry. Investors also speak of positive momentum. The Growth Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Canadian Pacific Railway. Sales Growth has a rank of 81, which means that, currently, professionals expect the company to grow more than 81% of its competitors. Profit Growth with a rank of 76 is also above average. But Capital Growth has only a rank of 44, and Stock Returns with 44 are also below-average. Stock returns for Canadian Pacific Railway have recently been below 56% of alternative investments. ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 74, is a buy recommendation for growth and momentum investors. Are investors forecasting troubles based on the lack of operating investment activity at the company? This could be one explanation as to why stock returns are low. But stock returns can also be the result of correcting an error in the past, in this case, an overly optimistic outlook on the future, which is now more realistic. The Value Ranks may confirm such a picture. The more important growth indicators are revenues and profits, which are both above average for Canadian Pacific Railway. This is a positive sign from the company's operational side and may give investors courage, despite the poor recent stock price performance. While momentum is a popular investment factor, the value aspect might be the more important one, in the longer term. We recommend analyzing the stock with the Obermatt Value, Safety, and Sentiment Ranks to arrive at a 360° View of the stock purchase case, especially since the growth performance is mixed here. ...read more

GROWTH METRICS	2021	2022	2023	2024
REVENUE GROWTH
REVENUE GROWTH	24	43	67	81
PROFIT GROWTH
PROFIT GROWTH	5	12	79	76
CAPITAL GROWTH
CAPITAL GROWTH	n/a	82	50	44
STOCK RETURNS
STOCK RETURNS	30	35	39	44
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	26	26	73	74

Last update of Growth Rank: 19-Dec-2024. Stock analysis on growth metrics: The higher the rank, the higher the growth and returns of Canadian Pacific Railway.

Safety Metrics in Detail

ANALYSIS: With an Obermatt Safety Rank of 73 (better than 73% compared with alternatives), the company Canadian Pacific Railway has financing practices on the safer side, which mean that their overall debt burden is lower than average. This doesn't mean that the business of Canadian Pacific Railway is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with two out of three indicators above average for Canadian Pacific Railway. Leverage is at a rank of 67, meaning the company has a below-average debt-to-equity ratio. It has less debt than 67% of its competitors. Liquidity is also good at a rank of 98, meaning the company generates more profit to service its debt than 98% of its competitors. This indicates that the company is on the safer side when it comes to debt service. But Refinancing is lower at a rank of 30, which means that the portion of the debt that is about to be refinanced is above-average. It has more debt in the refinancing stage than 70% of its competitors. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 73 (better than 73% compared with alternatives), Canadian Pacific Railway has a financing structure that is safer than that of its competitors. The refinancing issues could be a short-term problem, especially if the company has reputation issues. Banks and investors don't like to refinance debt if there are clouds on the horizon. For this reason, investors should look at the refinancing environment for Canadian Pacific Railway. Does it look safe that debt that is coming due can be covered with new debt? If that is the case, then the financing situation of the company is on the safer side. If not, it may be better to wait until refinancing has been completed and the Refinancing rank is good again. Investors may have a short-term debt challenge with Canadian Pacific Railway and should also compare Obermatt’s Value, Growth, and Sentiment Ranks before making a decision. ...read more

SAFETY METRICS	2021	2022	2023	2024
LEVERAGE
LEVERAGE	66	36	62	67
REFINANCING
REFINANCING	42	10	28	30
LIQUIDITY
LIQUIDITY	64	65	98	98
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	57	15	65	73

Last update of Safety Rank: 19-Dec-2024. Stock analysis on safety metrics: The higher the rank, the lower the leverage of Canadian Pacific Railway and the more cash is available to service its debt.

Sentiment Metrics in Detail

SENTIMENT	2021	2022	2023	2024
ANALYST OPINIONS
ANALYST OPINIONS	n/a	47	67	^new
OPINIONS CHANGE
OPINIONS CHANGE	n/a	9	49	^new
PRO HOLDINGS
PRO HOLDINGS	n/a	71	47	^new
MARKET PULSE
MARKET PULSE	n/a	44	60	^new
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	n/a	27	57	^new

Last update of Sentiment Rank: 19-Dec-2024. Stock analysis on sentiment metrics: The higher the rank, the more positive the sentiment for Canadian Pacific Railway.
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