Canadian Pacific Railway (CP) Reports Q4 EPS of $5.06, Revenues Beat

Canadian Pacific Railway (NYSE: CP) reported Q4 EPS of $5.06, $1.12 better than the analyst estimate of $3.94. Revenue for the quarter came in at $2.01 billion versus the consensus estimate of $1.63 billion.

Fourth-quarter 2020 highlights

• Revenues decreased 3 percent to $2.01 billion, from $2.07 billion in Q4 2019
• OR improved by 310 basis points (bps) to 53.9 percent
• Diluted EPS improved 23 percent to $5.95, from $4.82 in Q4 2019, while adjusted diluted EPS rose 6 percent to record $5.06, from $4.77 in Q4 2019

"With a foundation of strong operational performance and a commitment to controlling what we can, the team continues to deliver," said Keith Creel, CP President and CEO. "Despite the continued COVID-19 impacts, volumes steadily improved over the second half of 2020 and we saw revenue ton mile ("RTM") growth in the fourth quarter."

"I'm proud to say that our 2020 full-year results, including from a safety perspective, exceeded our expectations, in what has been one of the most challenging years any of us have faced," said Creel. "I'm continually impressed by the resiliency of the CP family, particularly those who provide an essential service to North Americans day in and day out, no matter the challenges. The 12,000-strong CP family responded to extraordinary circumstances in 2020 with grit and courage, ensuring that our railway was able to serve our customers, shareholders and communities."

Full-year 2021 guidance

• Double-digit adjusted diluted EPS growth relative to 2020's adjusted diluted EPS of $17.67
• High single-digit volume growth, as measured in RTMs
• Capital expenditures of $1.55 billion

CP's guidance is based on the following key assumptions:

• Effective tax rate of 24.6 percent
• Other components of net periodic benefit recovery will increase by approximately $40 million versus 2020

"The uncertainty caused by the COVID-19 pandemic dramatically disrupted global supply chains," said Creel. "By leveraging our unique growth opportunities and applying our precision scheduled railroading operating model, CP is continuing to lead the industry. The momentum we've created in the fourth quarter will continue into 2021."

For earnings history and earnings-related data on Canadian Pacific Railway (CP) click here.

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