NYSE:CP
CANADIAN PACIFIC KANSAS CITY LTD/CN
A leading North American freight railroad generating robust cash flow from diversified cargo segments across the US and Canada.
Key Metrics
Investment Thesis
Bull Case
Investors may favor CP due to its consistent revenue growth trajectory, having expanded from $8.81B in 2022 to $15.08B in 2025. The company's ability to generate high operating cash flow relative to net income suggests strong pricing power and cost control within the freight sector.
Bear Case
Concerns exist regarding the high level of goodwill at $18.44B, which could be subject to impairment if market valuations decline. The significant reduction in cash and equivalents combined with heavy share repurchases may limit financial flexibility for future acquisitions or unexpected capital needs.
About CANADIAN PACIFIC KANSAS CITY LTD/CN
Canadian Pacific Kansas City Ltd (CP) is a premier North American freight railroad operator connecting over 40,000 miles of track across the United States and Canada. The company serves diverse markets including energy, agriculture, manufacturing, and consumer goods sectors with its extensive rail network. Key products include high-volume bulk commodities like grain and coal, as well as intermodal containers and hazardous materials.
Analysis
Management Discussion
Recent financial performance highlights strong operational efficiency with net income reaching $4.14B in 2025, reflecting a recovery from 2024 levels. The company generated significant operating cash flow of $5.31B, though it maintained an aggressive balance sheet strategy by reducing cash reserves to $184M and repurchasing $3.94B in shares. Despite substantial capital expenditures of $3.10B for infrastructure maintenance and expansion, the firm successfully managed its debt load with total liabilities at $39.12B.
Industry Overview
The North American freight railroad industry is characterized by high fixed costs, regulatory oversight, and a strong correlation with global trade volumes and agricultural output. Consolidation trends continue as smaller carriers face pressure from larger networks seeking economies of scale to compete with trucking and shipping alternatives.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Revenue | $8.81B | $12.55B | $14.55B | $15.08B |
| Cost of Revenue | $0 | $0 | $0 | $0 |
| Gross Profit | $8.81B | $12.55B | $14.55B | $15.08B |
| Operating Expenses | $5.49B | $8.17B | $9.37B | $9.47B |
| Operating Income | $3.33B | $4.39B | $5.18B | $5.61B |
| Stock-Based Comp | $113.0M | $122.0M | $108.0M | $59.0M |
| D&A | $853.0M | $1.54B | $1.90B | $2.02B |
| Amortization | $3.0M | $61.0M | $85.0M | $87.0M |
| Non-Operating Income | $816.0M | $-7.44B | $-407.0M | $-127.0M |
| Pre-Tax Income | $4.14B | $-3.05B | $4.77B | $5.48B |
| Income Tax | $628.0M | $-6.98B | $1.06B | $1.34B |
| Continuing Ops | $3.52B | $3.92B | $3.71B | $4.14B |
| Discontinued Ops | $0 | $0 | $0 | $0 |
| Net Income | $3.52B | $3.92B | $3.71B | $4.14B |
| Minority Interest | $0 | $-4.0M | $-5.0M | $-4.0M |
| Net to Common | $3.52B | $3.93B | $3.72B | $4.14B |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Current Assets | $1.89B | $3.00B | $3.38B | $2.94B |
| Cash & Equivalents | $451.0M | $464.0M | $739.0M | $184.0M |
| Accounts Receivable | $1.02B | $1.89B | $1.97B | $2.03B |
| Other Current Assets | $422.0M | $651.0M | $677.0M | $726.0M |
| Long-Term Assets | $71.61B | $76.90B | $84.36B | $83.01B |
| PP&E (Net) | — | $51.74B | — | — |
| Intangibles | — | $2.97B | $3.15B | $2.91B |
| Goodwill | $344.0M | $17.73B | $19.35B | $18.44B |
| Operating Leases | $267.0M | $347.0M | $364.0M | $422.0M |
| Other LT Assets | $25.90B | $4.11B | $61.50B | $61.24B |
| Total Assets | $73.50B | $79.90B | $87.74B | $85.94B |
| Current Liabilities | $3.21B | $5.71B | $5.66B | $5.99B |
| Current Leases | $68.0M | $102.0M | $112.0M | $111.0M |
| Other Current Liab | $2.68B | $4.76B | $4.64B | $5.08B |
| Long-Term Liabilities | $31.40B | $31.78B | $33.19B | $33.13B |
| LT Operating Leases | $202.0M | $242.0M | $254.0M | $299.0M |
| Other LT Liab | $31.19B | $31.54B | $31.35B | $31.66B |
| Total Liabilities | $34.61B | $37.49B | $38.85B | $39.12B |
| Shareholders' Equity | $38.89B | $42.41B | $48.89B | $46.83B |
| Retained Earnings | $13.20B | $16.42B | $19.43B | $19.78B |
| AOCI | $91.0M | $-618.0M | $2.68B | $1.24B |
| Total L&E | $73.50B | $79.90B | $87.74B | $85.94B |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Net Income (CFO) | $3.52B | $3.92B | $3.71B | $4.14B |
| Non-Cash Adjustments | $251.0M | $-516.0M | $1.20B | $1.32B |
| Working Capital Changes | $374.0M | $730.0M | $356.0M | $-150.0M |
| Cash from Operations | $4.14B | $4.14B | $5.27B | $5.31B |
| Capital Expenditures | $1.56B | $2.47B | $2.83B | $3.10B |
| Cash from Investing | $-1.50B | $-2.16B | $-2.80B | $-2.67B |
| Share Buybacks | $0 | — | — | $3.94B |
| Dividends Paid | $707.0M | $707.0M | $709.0M | $796.0M |
| Cash from Financing | $-2.30B | $-1.96B | $-2.25B | $-3.15B |
| FX Effect | $20.0M | $-7.0M | $54.0M | $-53.0M |
| Net Change in Cash | $369.0M | $13.0M | $275.0M | $-555.0M |
| Beginning Cash | $82.0M | $451.0M | $464.0M | $739.0M |
| Ending Cash | $451.0M | $464.0M | $739.0M | $184.0M |
Frequently Asked Questions
How does CANADIAN PACIFIC KANSAS CITY LTD/CN make money?
The company operates through three primary business units: Surface Freight (bulk commodities such as grain, coal, limestone, and potash), Intermodal (containerized goods moving between rail and truck), and Domestic Trucking (providing drayage services to connect rail terminals with ports and industrial sites).
What are the main risks for CP?
Regulatory changes regarding environmental compliance could increase operating costs for fuel and emissions. Geopolitical tensions or trade policy shifts may disrupt cross-border rail traffic between the US and Canada. Severe weather events pose a constant threat to track integrity and operational reliability, potentially causing service delays. Rising fuel prices directly impact the company's cost of revenue given its energy-intensive operations.
What is CP's competitive advantage?
CP possesses a massive network density spanning the American heartland, providing direct access to key export gateways like the Port of Los Angeles. The company benefits from high barriers to entry due to its extensive track infrastructure and strategic partnerships with major shipping lines and energy producers.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.