CP Delivers Sub-60% Operating Ratio on Strong Volume; We Raise Our FVE Slightly
Rails often struggle to maintain profitability and service when they quickly add volume at greater than a mid-single-digit rate, but in the second quarter, Canadian Pacific deftly added 12% revenue ton miles (8% greater carloads) while producing a record 58.7% operating ratio. We increased our fair value estimate about 3% as we fine-tuned our revenue per unit rate assumptions, and we maintain our wide moat rating.ÂCP grew particularly well in potash (carloads up 32% year over year), metals, min...
Canadian Pacific Railway operates a transcontinental railway in Canada and the U.S. Co.'s business mix includes bulk commodities, merchandise freight and intermodal traffic, serving the principal business centers of Canada from Montreal, Quebec, to Vancouver, British Columbia, and the U.S. Northeast and Midwest regions. As of Dec 31 2016, Co. operated on a network of approximately 12,400 miles of track, of which CP owns 10,800 miles and has access to 1,600 miles under trackage rights and lease agreements. Of the total mileage operated, about 5,600 miles were located in western Canada, 2,000 miles in eastern Canada, 4,400 miles in the U.S. Midwest and 400 miles in the U.S. Northeast.
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