Canadian Pacific Continues to Grapple With Rising Expenses, Debt Woes

Core Viewpoint - Canadian Pacific Kansas City Limited (CP) is currently facing multiple challenges that make it an unattractive investment option [1] Earnings Estimates - The Zacks Consensus Estimate for first-quarter 2026 earnings has decreased by 2.25% over the past 60 days, with downward revisions of 2.92% and 3.78% for 2025 and 2026, respectively, indicating a lack of confidence from brokers [2][3] - The current earnings estimates are 0.87 for the next quarter, 3.33 for the current year, and 3.82 for the next year, showing a downward trend in revisions [3] Price Performance - CP's stock has declined by 9.7% over the past year, while the Transportation - Rail industry has seen a growth of 3.3% [3] Operating Expenses - Operating expenses for CP rose by 1.5% year over year in the first nine months of 2025, with labor costs increasing by 0.7% despite a 3% decrease in fuel expenses [5][7] Financial Health - CP has high leverage, exiting Q3 2025 with cash and cash equivalents of C$411 million against long-term debt of C$21.5 billion, indicating insufficient cash to meet short-term obligations [8] - The company operates in a challenging macro environment characterized by economic uncertainty and geopolitical tensions [8] Industry Ranking - The rail industry has a Zacks Industry Rank of 175 out of 243, placing it in the bottom 27%, which negatively impacts CP's stock performance [9]