CP Stock Forecast & Price Target

Canadian Pacific Kansas City's revenue exhibited a year-over-year growth of 2.7%, bolstered by a robust increase in revenue ton miles (RTMs) of 6.5%, despite a yield compression of 3.6%. The company demonstrated prudent financial management, as its leverage ratio improved to 3.0x while still executing $1.4 billion in buybacks, accompanied by an increase in free cash flow to $605 million. Positive demand fundamentals were evident in grain and potash shipments, which saw volume increases of 11% and were supported by strong network performance and growth in the domestic intermodal segment driven by the success of the MMX service.

The operating income for Canadian Pacific Kansas City (CPKC) increased by 5.4% year-over-year but missed expectations by approximately 2.5%, primarily due to yield headwinds and integration challenges following the Kansas City Southern merger. Furthermore, estimates for 2026 and 2027 EPS have been revised downward, indicating a reduction in growth expectations tied to revenue impacts from ongoing systems integration issues. Additionally, a decline in volume growth projections and negative trends in key segments such as metals and minerals, coupled with external risks including economic volatility and unfavorable currency fluctuations, contribute to a negative outlook for CPKC's stock.