Canadian Pacific Railway

I am reviewing this stock (TSX-CP) today as I have not reviewed it since I received the annual report for the end of December 2008. I first bought this stock in 1986, but I have only tracked it on quicken since 1987. I sold this stock in 1999, and I made a profit of 5.4% per year including dividends. I bought this stock again in October of 2006 and since that time have I have made a negative profit of 4.25% per year, including dividends.

The stock is depressed because of the current recession. 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. However, even with lowering their expectations on this stock, a number of analysts are still calling this stock a buy.

If you look at the growth figures for this stock, they are mostly a mixed bag. They range from good to ok to very low. For example, the 10 year grow in Revenue is lousy at just over 3% per year. The 5 year growth in Revenue at just over 6% is ok, but nothing to write home about. The 10 year growth in stock price plus dividends is very good at over 12% per year. However, the same growth for the last 5 years is low at just over 7%.

Moving on to look at the Asset/Liability Ratios; I find the Liquidity Ratio low, but over 1.00 and the Asset/Liability Ratio better at over 1.60. I have updated my spreadsheet for the first quarter of 2009 and both this ratios are now higher. I like to see both ratios at 1.50 or above and for this company, only the Asset/Liability Ratio does this.

The Return on Equity (ROE) for 2008 was good at only 10.3%. However, the 5 running average ROE to December 2008 was even better at 13.4%. The ROE for the first quarter of 2009 was low and it comes in only at 3.8%; however, the year has just started. This was the worse thing about the first quarter, the low ROE.

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.