Canadian Pacific Railway Ltd
🇨🇦 CP.TO · Toronto · CA13646K1084
Infrastructure
CAD 109.83 price at analysis
Scores
Key Metrics
Powered by EODHDP/E (TTM)
24.3
P/E (Price-to-Earnings)Shows how much investors pay for each $1 of profit. We display the TTM P/E (Trailing Twelve Months) which uses actual earnings from the last 4 quarters. This is more reliable than Forward P/E which uses analyst estimates.
Calculation: 109.83 ÷ 4.52 = 24.3
TTM period through: 2025-12-31
Forward P/E (estimated): 21.3
Based on analyst estimates
Reference: Provider P/E (Trailing): 24.4
Yield (Fwd)
0.83%
Dividend YieldThe Forward yield (Fwd) shows the next announced annual dividend / current price — what you'd earn going forward. The Trailing yield (TTM) in the tooltip shows dividends actually paid in the last 12 months. Forward is shown as primary because it reflects the company's current commitment to shareholders.
Trailing Yield (TTM): 0.81%
Net Debt/EBITDA (TTM)
2.8x
Latest quarter: 10.4x
Net Debt / EBITDAA leverage ratio showing how many years of EBITDA (earnings before interest, taxes, depreciation, and amortization) it would take to repay net debt. EBITDA approximates operating cash generation. Lower ratios (e.g., <3x) are generally safer; higher (e.g., >5x) may indicate more financial risk.
TTM through: 2025-12-31
Latest quarter (2025-12-31): 10.4x
The quarterly value can spike when quarterly EBITDA is very low (e.g., one-time charges).
Quick guide: <2x manageable, >4x can be risky (sector-dependent).
Payout (Fwd)
20.1%
Payout RatioDividends as a percentage of earnings. The Forward payout (Fwd) uses the announced dividend divided by actual past earnings (TTM) — it tells you if the company can afford what it promised. Very high payouts can be risky, especially if profits fall.
Announced dividend / actual earnings (TTM)
Payout (TTM): 19.2%
Cash Flow Payout (TTM): 15.0%
FCF Coverage (TTM): 2.72x
ROE
8.6%
ROE (Return on Equity)A profitability measure: how much profit is generated from shareholders’ equity. Higher isn’t always better if it comes from high debt.
EV/EBITDA
14.6x
EV/EBITDAA valuation ratio that compares total business value (including debt) to EBITDA. Lower can mean cheaper, but context matters.
Summary
Canadian Pacific is a premier North American railway with an unparalleled single-line network and an exceptionally wide competitive moat. While the underlying fundamentals and dividend safety are outstanding, the current valuation around $110 (P/E 24) offers limited upside and the 0.8% yield does not meet core income requirements. Existing shareholders should maintain positions given the phenomenal business quality, but new investors may want to wait for a more attractive entry point.
Sector Context
Canadian Pacific operates as a Class I freight railway, providing essential transportation services across Canada, the US, and Mexico. In the infrastructure sector, railways operate as virtual duopolies or monopolies with massive barriers to entry, providing highly predictable, inflation-protected cash flows that are ideal for long-term dividend growth, albeit often trading at a valuation premium.
📊 Strategy Analysis
- • Unparalleled North American rail network providing a wide competitive moat following the KCS merger integration.
- • Exceptionally safe dividend with a cash flow payout ratio of just 15% and a strong 11% CAGR over the last 10 years.
- • Solid balance sheet deleveraging progress, with Net Debt/EBITDA improving to 2.75x from 4.2x in 2019.
⚠ What to Watch
- • Current valuation is highly stretched at a trailing P/E of 24.32, well above the strategy's 8-15x target range.
- • Dividend yield of 0.81% falls significantly short of the 3% minimum requirement for income-focused portfolios.
- • Macroeconomic headwinds, including rising oil prices and inflation fears, could put short-term pressure on operating costs.
📊 Historical Trends (10 Years)
Powered by EODHDThese charts show how key metrics have evolved over the past decade, helping you identify if the company is improving or deteriorating.
Debt Evolution (Net Debt / EBITDA)
Lower values are better. A declining trend indicates the company is reducing its debt (deleveraging).
Revenue & Earnings Growth
Consistent growth in revenueRevenue
The money a company brings in from selling its products or services. It’s the top line before costs. (blue) and earningsEarnings (Profit)
What’s left after expenses. Positive earnings mean the business made a profit; negative means a loss. (green) indicates a healthy business. Look for upward trends and recoveries after temporary dips.
Dividend Sustainability (FCF vs Dividends Paid)
Free cash flowFree Cash Flow
Cash left after the company pays for running the business and maintaining it. Often used to fund dividends, pay debt, or buy back shares. (FCFFCF (Free Cash Flow)
Short for Free Cash Flow: cash left after operating needs and maintenance spending., blue) should cover dividends paidDividends Paid
Cash the company paid out to shareholders. It’s not guaranteed and can change over time. (green). If dividends consistently exceed FCFFCF (Free Cash Flow)
Short for Free Cash Flow: cash left after operating needs and maintenance spending., the dividend may be at risk.
Analysis date: 2026-04-04
Disclaimer: This information is for educational purposes only. Not financial advice.