Analysts rate Canadian Pacific Railway Co. (CP:TSX) with a Strong Buy, $106 Target

STA Research
by: STA Research

Analysts rate Canadian Pacific Railway Co. with a consensus Strong Buy rating and a 12-month average target price of $106.28 per share.

Last week, CIBC Capital Markets maintained the Overweight rating on  Canadian Pacific Railway  and keeps the target price at $106 on the company’s stock.

Based on the Canadian Pacific Railway Limited stock forecasts from 14 analysts, the average analyst target price for Canadian Pacific Railway Limited is CAD 106.28 over the next 12 months. Canadian Pacific Railway Limited’s average analyst rating is Strong Buy. Stock Target Advisor’s own stock analysis of Canadian Pacific Railway Limited is Slightly Bullish , which is based on 6 positive signals and 4 negative signals. At the last closing, Canadian Pacific Railway Limited’s stock price was CAD 101.17. Canadian Pacific Railway Limited’s stock price has changed by +2.96% over the past week, +8.84% over the past month and +12.76% over the last year.

After unsuccessful labour talks between the company and the union on Sunday, Canadian Pacific Railway trains are stuck in their tracks and thousands of workers are picketing.

At a time when the supply chain is already being disrupted by the pandemic and Russia’s war on Ukraine, the work stoppage is expected to send shockwaves through the farming and industrial industries. As the House returns from a two-week recess on Monday, politicians and business leaders are putting pressure on Ottawa to intervene.

What we like:

Superior risk adjusted returns

This stock has performed well, on a risk adjusted basis, compared to its sector peers(for a hold period of at least 12 months) and is in the top quartile.

High dividend returns

The stock has outperformed its sector peers on average annual dividend returns basis in the past 5 years (for a hold period of at least 12 months) and is in the top quartile. This can be a good buy, especially if it is outperforming on total return basis , for investors seeking high income yields.

Positive cash flow

The company had positive total cash flow in the most recent four quarters.

Positive free cash flow

The company had positive total free cash flow in the most recent four quarters.

Superior Earnings Growth

This stock has shown top quartile earnings growth in the previous 5 years compared to its sector.

Superior Revenue Growth

This stock has shown top quartile revenue growth in the previous 5 years compared to its sector.

What we don’t like:

Below median total returns

The company has under performed its peers on annual average total returns in the past 5 years.

Overpriced on cashflow basis

The stock is trading high compared to its peers on a price to cash flow basis. It is priced above the median for its sectors. Proceed with caution if you are considering to buy.

Highly leveraged

The company is in the bottom half compared to its sector peers on debt to equity and is highly leveraged. However, do check the news and look at its sector and management statements. Sometimes this is high because the company is trying to grow aggressively.

Overpriced on free cash flow basis

The stock is trading high compared to its peers on a price to free cash flow basis. It is priced above the median for its sectors. Proceed with caution if you are considering to buy.

 

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