A month has gone by since the last earnings report for Canadian Pacific Kansas City (CP). Shares have added about 6.5% in that time frame, outperforming the S&P 500.
But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Canadian Pacific Kansas City due for a pullback? Well, first let's take a quick look at the latest earnings report in order to get a better handle on the recent catalysts for Canadian Pacific Kansas City Limited before we dive into how investors and analysts have reacted as of late.
CP's Q2 Earnings Beat Estimates
Canadian Pacific Kansas City Limited reported better-than-expected second-quarter 2026 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate.
However, the company’s stock has declined 2.6% since its earnings release on July 29, 2026.
Quarterly earnings of 92 cents per share beat the Zacks Consensus Estimate of 89 cents by 3.4%. The bottom line increased 13% year over year on a core adjusted basis.
Operating revenues of $3.01 billion surpassed the consensus estimate of $2.91 billion by 3.3%. In Canadian dollars, revenues increased 13% year over year to C$4.16 billion.
In the reported quarter, total freight revenues per revenue ton-mile increased 9% year over year. Total freight revenues per carload rose 12%, reflecting favorable pricing and business mix.
On a reported basis, operating income increased 10% year over year to C$1.47 billion. However, total operating expenses rose 14% to C$2.69 billion, mainly due to a 53% increase in fuel expenses. The reported operating ratio deteriorated 90 basis points to 64.6%, while the core adjusted operating ratio worsened by the same magnitude to 61.6%.
Volumes, measured in revenue ton-miles, increased 4% year over year to 57.58 billion. Average train speed improved 7%, while average terminal dwell declined 16%, indicating stronger network efficiency.
CP’s Segmental Highlights
Freight revenues, which accounted for 98% of the top line, increased 13% year over year to C$4.09 billion.
CP’s freight business comprises Grain (up 24%), Coal (down 18%), Potash (up 10%), Fertilizers and Sulphur (up 12%), Forest Products (up 2%), Energy, Chemicals and Plastics (up 9%), Metals, Minerals and Consumer Products (up 18%), Automotive (up 22%) and Intermodal (up 11%).
Grain benefited from a record Canadian harvest and strong U.S. export demand. Automotive revenues gained from new business wins, while domestic intermodal benefited from the company’s SMX service and improving truck-to-rail conversion opportunities. Coal remained the primary weak spot due to lower mine production and shipment volumes.
Non-freight revenues increased 8.6% year over year to C$76 million in the second quarter.
CP’s Liquidity
Canadian Pacific exited the second quarter with cash and cash equivalents of C$366 million compared with C$409 million at the prior-quarter end.
Long-term debt amounted to C$22.25 billion compared with C$21.88 billion at the prior-quarter end.
Net cash provided by operating activities increased 27.4% year over year to C$1.73 billion during the second quarter. Capital expenditures totaled C$758 million compared with C$743 million in the year-ago period.
During the first six months of 2026, the company returned C$2.37 billion to shareholders through share repurchases and dividends, up 11% year over year.
CP Offers 2026 Outlook
Canadian Pacific continues to expect 2026 core adjusted earnings per share (EPS) to grow in the low double digits from the 2025 level of C$4.61.
The company expects 2026 revenue ton-miles to increase in the mid-single digits from the 2025 actual.
Management continues to anticipate capital expenditures of approximately C$2.65 billion for 2026, representing a roughly 15% decline from 2025. The core adjusted effective tax rate is expected to be approximately 24.75%.
CPKC expects improving freight fundamentals, commercial wins, integration benefits and disciplined cost control to support accelerated volume and earnings growth in the second half of 2026.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
Currently, Canadian Pacific Kansas City has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a score of F on the value side, putting it in the bottom 20% quintile for value investors.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Canadian Pacific Kansas City has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Canadian Pacific Kansas City belongs to the Zacks Transportation - Rail industry. Another stock from the same industry, Union Pacific (UNP), has gained 6.3% over the past month. More than a month has passed since the company reported results for the quarter ended June 2026.
Union Pacific reported revenues of $6.86 billion in the last reported quarter, representing a year-over-year change of +11.5%. EPS of $3.41 for the same period compares with $3.03 a year ago.
For the current quarter, Union Pacific is expected to post earnings of $3.43 per share, indicating a change of +11.4% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.9% over the last 30 days.
Union Pacific has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.
Beyond Nvidia: AI's Second Wave Is Here
The AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era.
See Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Canadian Pacific Kansas City Limited (CP): Free Stock Analysis Report
Union Pacific Corporation (UNP): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).