Canadian Pacific Railway 2

I am continuing my review of this stock (TSX-CP) today as I have not reviewed it since I received the annual report for the end of December 2008. I have had stock in this company since October of 2006 and I have not made any money on it. The stock is depressed because of the current recession.

When I look at Insider Buying and Insider Selling on this stock, I find there is some Insider Buying, but not much. The CEO and some officers have slightly increased their holdings, but nothing significant. So this really does not tell us much.

When I look at the spreadsheet ratios, the current P/E at 10.3 for the end of December 2008 is low, but if the earnings estimate for 2009 is accurate, then the current P/E would be almost 16 and this is not particularly low. And it is not particularly low for this stock because the 5 year low average is 10. However, I see that the current dividend yield at 2.3% is higher than the 5 year average of 1.5%. Also, the Graham Price is more than 10% above the current price. The other thing that shows a low current price is the Price/Book Value ratio and the current one is only 70% of the ratio average for the last 10 years. So, except for the P/E, the current price looks relatively low.

When looking for analyst recommendations, I find Strong Buy, Buy and Hold. The consensus would be a Buy rating, but close to a Hold. (See my site for information on analyst ratings.) As I said yesterday, most analysts have lowered their expected earnings for 2009 and 2010 since I last updated my spreadsheet in April 2009 for the last annual report. When analysts lower their earning estimates, a stock usually goes down.

When you look at the charts and compare this stock with the TSX Index and the Industrials Sub-Index, I see that you have to go to 5 years and 10 years for this stock to do as well as the TSX Index. It often beats the Industrials, but the charts show all these items quite close most of the time. Also, note that the charts do not consider dividends, so this has probably done as well and the TSX index when you consider dividends. It is not a bad stock, but not a great money maker. It is however, a solid dividend paying stock.

This company is a transcontinental railway operating in Canada and the U.S. Its rail network serves the principal centers of Canada, from Montreal to Vancouver and the U.S. northeast and midwest regions. Alliances with other carriers extend its market reach throughout the U.S. and into Mexico. Canadian Pacific Solutions provides logistics and supply chain expertise. Its web site is www.cp.ca. See my spreadsheet at www.spbrunner.com/stocks/cp.htm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets.