$CP · CANADIAN PACIFIC KANSAS CITY LTD/CN
CPKC reported Q3 FY2026 results with revenues of C$4.219B, up 15% YoY, and GAAP diluted EPS of C$1.04. Core adjusted diluted EPS came in at $1.28, a 16% increase from $1.10 in Q3 2025. The operating ratio deteriorated to 64.8% from 63.5%, pressured by a sharp rise in fuel costs to C$667M from C$415M.
- Q3 revenues rose 15% YoY to C$4.219B, driven by freight revenue of C$4.139B.
- Core adjusted diluted EPS of $1.28 beat the prior-year $1.10 by 16%.
- Reported operating ratio worsened 130 bps to 64.8%; core adjusted OR up 120 bps to 61.9%.
- Fuel costs surged to C$667M from C$415M, unfavorably impacting OR by 170-190 bps.
- Nine-month net income fell to C$2.785B from C$3.060B, reflecting absence of prior-year C$333M gain on Panama Canal Railway sale.
Extended-hours trading shows CPKC down 4.17% to $85.70 vs the $91.13 regular close, suggesting the market is penalizing the operating ratio deterioration and fuel cost headwinds despite the 15% revenue growth and 16% core adjusted EPS gain.
CPKC's 15% top-line growth and 16% core EPS gain show strong commercial momentum, but the 130 bps OR deterioration and 4%+ after-hours selloff signal the market is focused on margin pressure from fuel costs.
CPKC's 15% revenue growth outpaces typical North American Class I rail peers, but the 64.8% OR remains elevated versus the sub-60% ratios that best-in-class operators target. Fuel cost inflation is an industry-wide headwind.
Higher fuel prices unfavorably impacted reported and core adjusted OR by 170 and 190 bps respectively. Macroeconomic headwinds cited by CEO Creel as countering network momentum. Effective tax rate jumped to 32.79% in Q3 from 24.34% a year ago.