Canadian Pacific Railway operates a transcontinental railway in Canada and the United States. The company provides logistics and supply chain expertise services. It transports bulk commodities, including grain, coal, fertilizers, and sulphur; and intermodal traffic comprising retail goods in overseas containers that can be transported by train, ship, and truck, as well as in domestic containers and trailers that can be moved by train and truck. The company was founded in 1881 and is based in Calgary, Canada.
CP Price Forecast Based on DCF Valuation
DCF Fair Value Target:
We started the process of determining a valid price forecast for Canadian Pacific Railway Ltd with a discounted cash flow analysis -- the results of which can be found in the table below. To summarize, we found that Canadian Pacific Railway Ltd ranked in the 37th percentile in terms of potential gain offered. Our DCF analysis suggests the stock is overvalued by about 19.33%. The most interesting components of our discounted cash flow analysis for Canadian Pacific Railway Ltd ended up being:
The stock's equity weight, or the proportion of capital from equity relative to debt, is 82. Notably, its equity weight is greater than 67.58% of US equities in the Industrials sector yielding a positive free cash flow.
Canadian Pacific Railway Ltd's interest coverage rate -- a measure of gross earnings relative to interest payments -- comes in at 8.02. This coverage rate is greater than that of 68.47% of stocks we're observing for the purpose of forecasting via discounted cash flows.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
For other companies in the Industrials that have a similar discounted cashflow valuation profile (and ensuing price forecasts) as CP, try MNTX, GTES, LECO, WSO, and LMT.