CP Stock Forecast & Price Target

Canadian Pacific Kansas City (CPKC) demonstrated a positive growth trajectory with a 2.7% year-over-year revenue increase, supported by a significant 6.5% rise in revenue ton miles (RTMs), indicating strong operational performance, particularly in grain and intermodal segments. The company's improved leverage ratio of 3.0x and a rise in free cash flow to $605 million, despite substantial buybacks totaling $1.4 billion, highlight robust financial management and capital returns to shareholders. Furthermore, the strong demand fundamentals reflected in an 11% increase in grain volumes and a 40% growth in domestic intermodal volumes underscore CPKC's strategic positioning in key markets, enhancing its long-term growth outlook.

Canadian Pacific Kansas City (CPKC) faces a challenging outlook, marked by a 5.4% year-over-year increase in operating income that fell short by approximately 2.5%, primarily due to yield headwinds and the impact of systems integration issues that emerged post-merger. The company's earnings per share (EPS) estimates have been revised downward for 2025 and 2026 due to disappointing Q3 results and expectations of weaker volume growth, with QTD volumes trending down by 8% and specific sectors like metals and minerals experiencing a 1% decline year-over-year. Additional risks, including potential growth stalls in key regions, adverse weather conditions, unfavorable currency fluctuations, and broader economic volatility, add further uncertainty to CPKC's financial performance.