Canadian Pacific Drops 0.8% Post-Q2 Earnings Release

Canadian Pacific Kansas City Limited's Q2 2025 Performance

Canadian Pacific Kansas City Limited (CP) released its second-quarter 2025 financial results, which were not as strong as expected. Both earnings and revenues fell short of the Zacks Consensus Estimate, leading to a decline in the company’s stock price. Since the earnings announcement, CP shares have dropped by 0.8%.

The quarterly earnings, excluding 15 cents from non-recurring items, stood at 81 cents per share, missing the Zacks Consensus Estimate by 1.2%. Despite this, the bottom line showed a 5.2% improvement compared to the same period last year. However, operating revenues for the quarter reached $2.67 billion, falling 4.3% below the Zacks Consensus Estimate. On a year-over-year basis, the top line still managed to grow by 1.5%.

Freight Revenue Trends

In the reported quarter, total freight revenues per revenue ton miles decreased by 4% year over year. Additionally, total freight revenues per carload declined by 3% during the same period.

On a reported basis, operating income increased by 6%, while total operating expenses rose by 0.9% year over year. The operating ratio, which measures operating expenses as a percentage of revenues, improved by 110 basis points to 63.7% from 64.8% in the previous year's quarter.

Segmental Highlights

Freight revenues, which accounted for 98.1% of the total revenue, increased by 2.7%. Within the Freight segment, several categories saw growth, including Grain (up 12%), Coal (up 8%), Energy, chemicals, and plastics (up 2%), and Intermodal (up 9%). However, other segments experienced declines, such as Potash (down 7%), Metals, minerals, and consumer products (down 20%), Automotive (down 28%), and Fertilizers and Sulphur (down 5%).

Other revenues for the quarter increased by 1.3% year over year.

Liquidity Position

At the end of the second quarter, CP had cash and cash equivalents of C$799 million, up from C$739 million at the end of the December-end quarter of 2024. Long-term debt amounted to C$21.23 billion, compared to C$19.8 billion at the end of the fourth quarter of 2024.

Outlook for 2025

Despite ongoing uncertainties related to tariffs and trade policies, CP now expects 2025 core adjusted combined diluted earnings per share to grow between 10% and 14% from 2024 actuals, reaching approximately C$4.25 per share. The company also anticipates a mid-single-digit increase in 2025 RTMs (revenue ton miles) from 2024 levels.

Management projects capital expenditures for the full year to be C$2.9 billion. The core adjusted effective tax rate for 2025 is expected to be 24.5%.

Currently, CP holds a Zacks Rank of #3 (Hold), indicating a neutral stance on the stock.

Performance of Other Transportation Companies

Delta Air Lines (DAL)

Delta Air Lines reported second-quarter 2025 earnings of $2.10 per share, excluding $1.17 per share from non-recurring items. This beat the Zacks Consensus Estimate of $2.04 but marked an 11% decrease year over year due to high labor costs. Revenues for the June-end quarter reached $16.65 billion, surpassing the Zacks Consensus Estimate of $16.2 billion but showing a slight decline compared to the previous year.

J.B. Hunt Transport Services, Inc. (JBHT)

J.B. Hunt Transport Services, Inc. reported second-quarter 2025 earnings of $1.31 per share, missing the Zacks Consensus Estimate of $1.34. Earnings declined by 0.8% year over year. Total operating revenues of $2.93 billion fell slightly short of the Zacks Consensus Estimate of $2.94 billion and remained flat year over year. Several areas saw growth, including Intermodal loads, Truckload loads, and Integrated Capacity Solutions revenue per load, but these gains were offset by declines in Final Mile Services revenue and other segments.

United Airlines Holdings, Inc. (UAL)

United Airlines Holdings, Inc. delivered mixed results in the second quarter of 2025. Adjusted earnings per share of $3.87 exceeded the Zacks Consensus Estimate by a penny but declined by 6.5% year over year. Operating revenues of $15.2 billion missed the Zacks Consensus Estimate of $15.4 billion but showed a 1.7% increase year over year. Passenger revenues rose by 1.1% to $13.8 billion, with 46,186 passengers transported, marking a 4.1% increase year over year.