# Canadian Pacific Railway (CP.TO)

Canonical: https://gigainvestors.com/s/CP.TO

Analysis as of: 2026-10-16T07:33:46.270Z. Financial observations: FY1997–FY2025.

Listing currency: CAD. Reporting currency: CAD.

## Verdict

Not a wonderful business

Quality tests for Buy: not passed (profit record: pass; earnings resilience is evidence only). Published buy qualification: no.

Share price: CAD 123.41 per share; close as of 2026-10-15.

Estimated value: low CAD 69.69 per share, central CAD 85.91 per share, high CAD 100.19 per share. Buy at or below the central value CAD 85.91 per share. Valuation as of 2026-10-16T07:33:46.270Z; scenarios are not confidence intervals.

Expected annual return: 7.9% at the stated quote. About 7.9% a year at today's price (required return 10.0%). required return 10.0% a year (10% floor; CA 10-year bond 3.8% + 4 points).

## Checklist

### understandable: pass

- 2 revenue declines in the last 10 years (informational)

- Financial history: 10 years

- Years with declining revenue: 2

- Years with a net loss: 0

- Operating margin variation: 0.06×

Chart: Operating margin; fiscal year observations.

- FY2016: 0.39×

- FY2017: 0.38×

- FY2018: 0.39×

- FY2019: 0.40×

- FY2020: 0.43×

- FY2021: 0.40×

- FY2022: 0.38×

- FY2023: 0.35×

- FY2024: 0.36×

- FY2025: 0.38×

### moat: fail

- ROIC median below threshold

- ROIC worst years below threshold (more than 1 bad year allowed)

- Recent gross margin fell 13.7pp below the typical margin (limit 4pp)

- ROIC, median of available years: 11.2%

- ROIC, second-lowest year: 4.9%

- Typical minus recent gross margin: 13.7 pp

- Typical gross margin (annual median): 54.0%

- Recent gross margin (lower of latest and 3-year median): 40.3%

- Years with nonpositive capital: 0

- Capital spending / revenue: 20.2%

- ROIC including acquisitions, ten-year median: 7.0%

Chart: ROIC excluding acquisitions; fiscal year observations.

- FY2016: 13.8%

- FY2017: 17.2%

- FY2018: 14.2%

- FY2019: 15.3%

- FY2020: 14.9%

- FY2021: 4.7%

- FY2022: 4.9%

- FY2023: 7.5%

- FY2024: 7.9%

- FY2025: 8.5%

### economics: pass

- Owner earnings / net income, 5-yr: 0.98×

- Cash conversion uses consolidated totals: No

- Owner earnings, five-year total: CAD 18B

- Net income, five-year total: CAD 18B

- Return on incremental invested capital: 31.7%

- Working capital / revenue, annual change: -0.0 pp

- Working capital / revenue, change between three-year averages: 0.8 pp

- Working capital / revenue, final three-year average: 7.6%

Chart: Annual owner cash / profit; fiscal year observations.

- FY2021: 0.98×

- FY2022: 0.98×

- FY2023: 0.98×

- FY2024: 0.98×

- FY2025: 0.98×

### management: fail

- Historical market-dollar context (not the management verdict): 2016 to 2025 (9 years)

- buybacks unrelated to price (informational)

- ROIC first 3 years vs last 3 years: 14.2% vs 7.9%

- Per-share earnings: 2.17 to 4.21 (three-year endpoint medians)

- five-year and ten-year diluted share growth both above threshold

- acquired goodwill and intangibles (proxy) exceeds half of ten-year net income with low and deteriorating ROIC

- Management verdict uses per-share economic progress: Yes

- Ordinary dilution, 10-year annual growth: 1.8%

- Ordinary dilution, 5-year annual growth: 6.4%

- Market cap gain: CAD 62B

- Cumulative retained earnings: CAD 15B

- Diluted shares, 10-year annual growth: 1.8%

- Diluted shares, 5-year annual growth: 6.4%

- $1 test, starting fiscal year: FY2016

- $1 test, ending fiscal year: FY2025

- Per-share value growth: 8.6%

- Per-share value change: CAD 2.03

- Per-share value, starting three-year median: CAD 2.17

- Per-share value, ending three-year median: CAD 4.21

- Buybacks concentrated in cheaper years (correlation): -0.31

- Average buyback yield: 3.0%

- Buyback history: 6 years

- Debt-funded buybacks: No

- Acquisition spending: CAD 40B

- Cumulative net income, 10 years: CAD 29B

- ROIC, first three-year median: 14.2%

- ROIC, last three-year median: 7.9%

Chart: Earnings per share; fiscal year observations.

- FY2016: CAD 2.17

- FY2017: CAD 3.31

- FY2018: CAD 2.74

- FY2019: CAD 3.54

- FY2020: CAD 3.63

- FY2021: CAD 3.95

- FY2022: CAD 3.77

- FY2023: CAD 4.21

- FY2024: CAD 3.98

- FY2025: CAD 4.52

### accounting: pass

- Sloan accruals: -1.4%

- Receivables to sales index (DSRI): 0.99×

- Restructuring years, last five: 0

- Stock compensation / operating cash flow: 0.0%

- Earnings backed by cash: Yes

- Operating cash / earnings: 1.28×

- Accounting red flags: 0

- Goodwill and intangibles / equity: 0.87×

Chart: Sloan accruals; fiscal year observations.

- FY2016: -2.5%

- FY2017: 1.1%

- FY2018: -3.5%

- FY2019: -2.4%

- FY2020: -1.5%

- FY2021: -1.2%

- FY2022: -0.8%

- FY2023: -0.3%

- FY2024: -1.8%

- FY2025: -1.4%

## Holders

- [Nicolai Tangen](https://gigainvestors.com/AKO): tracked 13F investor; follow the investor page for holding quarter and amounts.

- [Sarah Ketterer](https://gigainvestors.com/CAU): tracked 13F investor; follow the investor page for holding quarter and amounts.

- [Nick Train](https://gigainvestors.com/LT): tracked 13F investor; follow the investor page for holding quarter and amounts.

- [Thomas Gayner](https://gigainvestors.com/MKL): tracked 13F investor; follow the investor page for holding quarter and amounts.

- [William Von Mueffling](https://gigainvestors.com/cc): tracked 13F investor; follow the investor page for holding quarter and amounts.

- [Chris Hohn](https://gigainvestors.com/tci): tracked 13F investor; follow the investor page for holding quarter and amounts.

## Price story

Price needs cash profits to grow 7.4% a year for ten years · "CIBC Says Canadian Grain, Potash Outlook Supportive for CN, CPKC" (finance.yahoo.com, Feb 2026) · sales +3.7%

Story as of 2026-10-16T09:59:57.685Z; price observation 2026-10-15.

Price needs cash profits to grow 7.4% a year for ten years

- 2026-02-23: CIBC Says Canadian Grain, Potash Outlook Supportive for CN, CPKC ([finance.yahoo.com](https://finance.yahoo.com/news/cibc-says-canadian-grain-potash-164552412.html))

### Sales · FY2024–2025

sales +3.7%; source https://www.sec.gov/Archives/edgar/data/16875/000001687526000008/cp-20251231.htm; observed 2026-02-26.

- FY2016: CAD 6.2B 

- FY2017: CAD 6.6B 

- FY2018: CAD 7.3B 

- FY2019: CAD 7.8B 

- FY2020: CAD 7.7B 

- FY2021: CAD 8.0B 

- FY2022: CAD 8.8B 

- FY2023: CAD 13B 

- FY2024: CAD 15B 

- FY2025: CAD 15B 

### Gross margin · FY2025

gross margin 40.3%; source https://www.sec.gov/Archives/edgar/data/16875/000001687526000008/cp-20251231.htm; observed 2026-02-26.

- FY2016: 53.5% 

- FY2017: 54.5% 

- FY2018: 55.2% 

- FY2019: 55.7% 

- FY2020: 57.5% 

- FY2021: 57.4% 

- FY2022: 52.1% 

- FY2023: 51.3% 

- FY2024: 51.9% 

- FY2025: 40.3% 

## Owner memo

Memo as of 2026-10-16T08:06:05.509Z.

### How it makes money

Operates in railroads; annual sales are CAD 15.1 billion.

- Source: https://www.sec.gov/Archives/edgar/data/16875/000001687526000008/cp-20251231.htm (filed 2026-02-26); FY2025: revenue 15078000000; grossProfit 6080000000; margin = grossProfit / revenue.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16); CP.TO: Canadian Pacific Kansas City Limited, together with its subsidiaries, owns and operates a transcontinental freight railway in Canada, the United States, and Mexico. The transports bulk commodities, including grain, coal, potash, fertilizers, and sulphur; merchandise freight consists of industrial and consumer products, such as forest products, energy, chemicals and plastics, metals, minerals, consumer products, and automotive; and intermodal traffic comprising retail goods in overseas containers. The company also provides rail and intermodal transportation services through a network of approximately 20,000 miles serving business centers. The company was formerly known as Canadian Pacific Railway Limited and changed its name to Canadian Pacific Kansas City Limited in April 2023. Canadian Pacific Kansas City Limited was founded in 1881 and is headquartered in Calgary, Canada.

### Why customers stay

Margins ranged from 40.3% to 51.9% during 2023–25; it earns 11.2% on its capital.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-26); FY2023: grossProfit / revenue = 51.3%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-26); FY2024: grossProfit / revenue = 51.9%.

- Source: https://www.sec.gov/Archives/edgar/data/16875/000001687526000008/cp-20251231.htm (filed 2026-02-26); FY2025: grossProfit / revenue = 40.3%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-26); 10-year return on capital observations [[2016,0.13828210749534778],[2017,0.17224560898718977],[2018,0.14155262645057792],[2019,0.152837763384663],[2020,0.14931738564431207],[2021,0.04692325780153625],[2022,0.04869045021840246],[2023,0.07513535773890803],[2024,0.07933687885981609],[2025,0.08485248887961716]]; median 0.11156729818748247. ROIC follows the displayed moat series; financial companies use return on tangible equity.

### Where the cash goes

Spends 27.6% of cash earnings on expansion; earns 31.7% on new investment.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-26); FY2016: growth capex 0; upkeep 1182000000; owner earnings 1057000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-26); FY2017: growth capex 679000000; upkeep 661000000; owner earnings 2405000000. Growth capex / owner earnings = 0.28232848232848234.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-26); FY2018: growth capex 855000000; upkeep 696000000; owner earnings 1951000000. Growth capex / owner earnings = 0.4382368016401845.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-26); FY2019: growth capex 941000000; upkeep 706000000; owner earnings 2369200000. Growth capex / owner earnings = 0.3971804828634138.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-26); FY2020: growth capex 0; upkeep 1671000000; owner earnings 1489800000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-26); FY2021: growth capex 721000000; upkeep 811000000; owner earnings 2795400000. Growth capex / owner earnings = 0.2579237318451742.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-26); FY2022: growth capex 704000000; upkeep 853000000; owner earnings 3463000000. Growth capex / owner earnings = 0.20329194340167484.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-26); FY2023: growth capex 956000000; upkeep 1543000000; owner earnings 3858200000. Growth capex / owner earnings = 0.24778394069773468.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-26); FY2024: growth capex 963000000; upkeep 1900000000; owner earnings 3644800000. Growth capex / owner earnings = 0.26421202809482003.

- Source: https://www.sec.gov/Archives/edgar/data/16875/000001687526000008/cp-20251231.htm (filed 2026-02-26); FY2025: growth capex 1121000000; upkeep 2019000000; owner earnings 4059000000. Growth capex / owner earnings = 0.27617639812761763.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-26); Incremental return on capital 0.3166143451994178, from the economics test's unchanged annual inputs.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-26); Dividend observations: [[2016,255000000],[2017,310000000],[2018,348000000],[2019,412000000],[2020,467000000],[2021,507000000],[2022,707000000],[2023,707000000],[2024,709000000],[2025,796000000]]. Zero only counted when supported by a complete cash-flow statement.

- Source: https://www.sec.gov/Archives/edgar/data/16875/000001687526000008/cp-20251231.htm (filed 2026-02-26); FY2025: cash repurchases 3942000000 CAD.

### Are managers owners

Insiders own <0.1% of the company.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16); CP.TO SharesStats.PercentInsiders = 0.044000000000000004 percentage points; cache date 2026-10-16.

### What could break it

"The Company is dependent on certain key suppliers of core railway equipment and materials" (SEC filing, Feb 2026)

- Source: https://www.sec.gov/Archives/edgar/data/16875/000001687526000008/cp-20251231.htm (filed 2026-02-26); The Company is dependent on certain key suppliers of core railway equipment and materials

### What the price says

The price assumes cash profits grow 7.4% yearly over ten years; actual growth was 18.3%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-26); Ten-year compound average after fade. Initial solved rate 0.09326860442595597. Price 123.41; FX 1; discount 0.1; same standard ten-year fade to terminal 0.03. FY2015 owner earnings/share 0.8273893229164734 → FY2025 4.425907752698724. Closing-price date 2026-10-15.

## Monthly share-price history (CAD per share)

- 2016-10: CAD 38.35 per share

- 2016-11: CAD 41.13 per share

- 2016-12: CAD 38.31 per share

- 2017-01: CAD 39.36 per share

- 2017-02: CAD 39.09 per share

- 2017-03: CAD 39.07 per share

- 2017-04: CAD 41.83 per share

- 2017-05: CAD 42.74 per share

- 2017-06: CAD 41.73 per share

- 2017-07: CAD 39.04 per share

- 2017-08: CAD 38.86 per share

- 2017-09: CAD 41.92 per share

- 2017-10: CAD 44.74 per share

- 2017-11: CAD 45.16 per share

- 2017-12: CAD 45.93 per share

- 2018-01: CAD 45.55 per share

- 2018-02: CAD 45.90 per share

- 2018-03: CAD 45.44 per share

- 2018-04: CAD 46.86 per share

- 2018-05: CAD 50.00 per share

- 2018-06: CAD 48.18 per share

- 2018-07: CAD 51.60 per share

- 2018-08: CAD 54.90 per share

- 2018-09: CAD 54.65 per share

- 2018-10: CAD 53.99 per share

- 2018-11: CAD 56.20 per share

- 2018-12: CAD 48.45 per share

- 2019-01: CAD 53.86 per share

- 2019-02: CAD 54.38 per share

- 2019-03: CAD 55.07 per share

- 2019-04: CAD 60.03 per share

- 2019-05: CAD 59.25 per share

- 2019-06: CAD 61.69 per share

- 2019-07: CAD 63.02 per share

- 2019-08: CAD 64.11 per share

- 2019-09: CAD 58.88 per share

- 2019-10: CAD 59.90 per share

- 2019-11: CAD 62.91 per share

- 2019-12: CAD 66.21 per share

- 2020-01: CAD 70.31 per share

- 2020-02: CAD 66.53 per share

- 2020-03: CAD 62.11 per share

- 2020-04: CAD 63.27 per share

- 2020-05: CAD 69.02 per share

- 2020-06: CAD 69.06 per share

- 2020-07: CAD 73.67 per share

- 2020-08: CAD 77.18 per share

- 2020-09: CAD 81.01 per share

- 2020-10: CAD 79.63 per share

- 2020-11: CAD 83.91 per share

- 2020-12: CAD 88.31 per share

- 2021-01: CAD 85.93 per share

- 2021-02: CAD 90.70 per share

- 2021-03: CAD 96.00 per share

- 2021-04: CAD 91.74 per share

- 2021-05: CAD 97.06 per share

- 2021-06: CAD 95.32 per share

- 2021-07: CAD 92.64 per share

- 2021-08: CAD 86.69 per share

- 2021-09: CAD 82.71 per share

- 2021-10: CAD 95.79 per share

- 2021-11: CAD 89.40 per share

- 2021-12: CAD 90.98 per share

- 2022-01: CAD 90.94 per share

- 2022-02: CAD 89.25 per share

- 2022-03: CAD 103.18 per share

- 2022-04: CAD 93.97 per share

- 2022-05: CAD 90.25 per share

- 2022-06: CAD 89.91 per share

- 2022-07: CAD 100.97 per share

- 2022-08: CAD 98.32 per share

- 2022-09: CAD 92.21 per share

- 2022-10: CAD 101.56 per share

- 2022-11: CAD 110.13 per share

- 2022-12: CAD 100.95 per share

- 2023-01: CAD 105.02 per share

- 2023-02: CAD 103.63 per share

- 2023-03: CAD 104.07 per share

- 2023-04: CAD 106.80 per share

- 2023-05: CAD 103.44 per share

- 2023-06: CAD 107.00 per share

- 2023-07: CAD 108.50 per share

- 2023-08: CAD 107.26 per share

- 2023-09: CAD 100.96 per share

- 2023-10: CAD 98.46 per share

- 2023-11: CAD 97.69 per share

- 2023-12: CAD 104.84 per share

- 2024-01: CAD 108.19 per share

- 2024-02: CAD 115.23 per share

- 2024-03: CAD 119.43 per share

- 2024-04: CAD 108.00 per share

- 2024-05: CAD 108.49 per share

- 2024-06: CAD 107.74 per share

- 2024-07: CAD 115.78 per share

- 2024-08: CAD 111.87 per share

- 2024-09: CAD 115.67 per share

- 2024-10: CAD 107.41 per share

- 2024-11: CAD 107.11 per share

- 2024-12: CAD 104.08 per share

- 2025-01: CAD 115.50 per share

- 2025-02: CAD 112.69 per share

- 2025-03: CAD 100.99 per share

- 2025-04: CAD 100.13 per share

- 2025-05: CAD 112.09 per share

- 2025-06: CAD 108.18 per share

- 2025-07: CAD 101.90 per share

- 2025-08: CAD 104.61 per share

- 2025-09: CAD 103.65 per share

- 2025-10: CAD 100.93 per share

- 2025-11: CAD 101.23 per share

- 2025-12: CAD 101.05 per share

- 2026-01: CAD 101.22 per share

- 2026-02: CAD 119.44 per share

- 2026-03: CAD 109.47 per share

- 2026-04: CAD 118.14 per share

- 2026-05: CAD 123.10 per share

- 2026-06: CAD 122.96 per share

- 2026-07: CAD 124.52 per share

- 2026-08: CAD 128.39 per share

- 2026-09: CAD 121.20 per share

- 2026-10: CAD 121.88 per share

## Annual estimated value (CAD per share)

- FY2016: low CAD 14.60 per share, central CAD 18.38 per share, high CAD 21.45 per share

- FY2017: low CAD 17.00 per share, central CAD 19.30 per share, high CAD 22.37 per share

- FY2018: low CAD 28.95 per share, central CAD 38.31 per share, high CAD 44.84 per share

- FY2019: low CAD 41.03 per share, central CAD 58.61 per share, high CAD 68.85 per share

- FY2020: low CAD 40.15 per share, central CAD 55.46 per share, high CAD 65.05 per share

- FY2021: low CAD 43.71 per share, central CAD 59.48 per share, high CAD 69.71 per share

- FY2022: low CAD 35.08 per share, central CAD 44.38 per share, high CAD 51.79 per share

- FY2023: low CAD 51.49 per share, central CAD 66.84 per share, high CAD 78.13 per share

- FY2024: low CAD 60.36 per share, central CAD 79.03 per share, high CAD 92.37 per share

- FY2025: low CAD 59.59 per share, central CAD 73.46 per share, high CAD 85.68 per share

Historical values use today's bond yield for every fiscal year

Historical values use today's FX rate into trading currency for every fiscal year

Historical values use current restated fundamentals and current commodity classification; they are not point-in-time estimates

Prior published observations retained from 2026-10-15T06:39:32.136Z where newer inputs omit a numeric field or fiscal period.

## Sources

[Original 10-K filing](https://www.sec.gov/Archives/edgar/data/16875/000001687526000008/cp-20251231.htm); period 2025-12-31, filed 2026-02-26.

Estimates depend on assumptions and are not guarantees or investment advice. Underlying data remains subject to its source licenses; public reading does not grant bulk redistribution rights.