CANADIAN PACIFIC KANSAS CITY LTD/CN (CP): CPKC reports solid third quarter results; on track to deliver a strong 2026
CANADIAN PACIFIC KANSAS CITY LTD/CN (CP) filed an SEC Form 8-K — Results of Operations and Financial Condition. Release: October 28, 2026 CPKC reports solid third quarter results; on track to deliver a strong 2026 Calgary – Canadian Pacific Kansas City (TSX: CP) (NYSE: CP) (CPKC) today announced its third-quarter results, including revenues of $4.2 billion, diluted earnings per share (EPS)
How this was made
The 30-second read
Why it matters
The results show strong top‑line growth but deteriorating cost efficiency, creating a nuanced market reaction.
Market read
CP's earnings update offers new data for traders focusing on transportation and logistics equities.
What to watch
Fuel price volatility and potential regulatory changes in cross‑border freight could amplify cost pressures.
CPKC reports solid third quarter results; on track to deliver a strong 2026
Third-quarter revenue increased 15 percent, operating income increased 11 percent and core adjusted diluted EPS increased 16 percent, while higher fuel prices and discrete tax items weighed on reported operating ratio and GAAP earnings growth.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Total revenues, three months ended September 30, 2026GAAP | $4.22B | – | 15% |
| Freight revenues, three months ended September 30, 2026GAAP | $4.14B | – | 15% |
| Non-freight revenues, three months ended September 30, 2026GAAP | $80M | – | 11% |
| Operating expenses, three months ended September 30, 2026GAAP | $2.73B | – | 18% |
| Compensation and benefits, three months ended September 30, 2026GAAP | $711M | – | 15% |
| Fuel expense, three months ended September 30, 2026GAAP | $667M | – | 61% |
| Materials expense, three months ended September 30, 2026GAAP | $130M | – | 14% |
| Equipment rents, three months ended September 30, 2026GAAP | $101M | – | (7)% |
| Depreciation and amortization, three months ended September 30, 2026GAAP | $529M | – | 5% |
| Purchased services and other, three months ended September 30, 2026GAAP | $594M | – | 5% |
| Operating income, three months ended September 30, 2026GAAP | $1.49B | – | 11% |
| Reported operating ratio, three months ended September 30, 2026GAAP | 64.8 percent | – | 130 basis points |
| Core adjusted operating income, three months ended September 30, 2026non-GAAP | $1.61B | – | – |
| Core adjusted operating ratio, three months ended September 30, 2026non-GAAP | 61.9 percent | – | 120 basis points |
| Net income, three months ended September 30, 2026GAAP | $916M | – | — |
| Net income attributable to controlling shareholders, three months ended September 30, 2026GAAP | $917M | – | — |
| Diluted earnings per share, three months ended September 30, 2026GAAP | $1.04 | – | 3% |
| Core adjusted diluted EPS, three months ended September 30, 2026non-GAAP | $1.28 | – | 16% |
| Effective income tax rate, three months ended September 30, 2026GAAP | 32.79% | – | – |
| Effective income tax rate excluding discrete items, three months ended September 30, 2026other | 24.75% | – | – |
| Revenue ton-miles, three months ended September 30, 2026other | 57,505 million RTM | – | 6% |
| Total carloads, three months ended September 30, 2026other | 1.19M | – | 5% |
| Net cash provided by operating activities, three months ended September 30, 2026GAAP | $1.55B | – | – |
| Additions to properties, three months ended September 30, 2026GAAP | −$613M | – | – |
| Total revenues, nine months ended September 30, 2026GAAP | $12.08B | – | 8% |
| Operating income, nine months ended September 30, 2026GAAP | $4.22B | – | 6% |
| Net income, nine months ended September 30, 2026GAAP | $2.79B | – | (9)% |
| Diluted earnings per share, nine months ended September 30, 2026GAAP | $3.14 | – | (5)% |
| Core adjusted diluted EPS, nine months ended September 30, 2026non-GAAP | $3.57 | – | – |
| Net cash provided by operating activities, nine months ended September 30, 2026GAAP | $4.25B | – | – |
| Additions to properties, nine months ended September 30, 2026GAAP | −$2.04B | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| GrainRevenue ton-miles increased 23% and carloads increased 20%. | $904M | – | 29% |
| CoalRevenue ton-miles decreased 11% and carloads decreased 8%. | $254M | – | — |
| PotashRevenue ton-miles decreased 7% and carloads decreased 8%. | $182M | – | 9% |
| Fertilizers and sulphurRevenue ton-miles decreased 7% and carloads decreased 1%. | $105M | – | 3% |
| Forest productsRevenue ton-miles increased 2% and carloads increased 1%. | $211M | – | 9% |
| Energy, chemicals and plasticsRevenue ton-miles were unchanged and carloads increased 1%. | $763M | – | 9% |
| Metals, minerals and consumer productsRevenue ton-miles increased 8% and carloads increased 8%. | $532M | – | 16% |
| AutomotiveRevenue ton-miles decreased 5% and carloads decreased 4%. | $373M | – | 9% |
| IntermodalRevenue ton-miles increased 10% and carloads increased 9%. | $815M | – | 22% |
Amounts quoted below without a unit are in millions, as in the filing’s tables. Per-share figures are as printed.
Capital returns
- Dividends declared per share were $0.268 for the three months ended September 30, 2026, compared with $0.228 for the three months ended September 30, 2025.
- Dividends paid were $236 million for the three months ended September 30, 2026 and $644 million for the nine months ended September 30, 2026.
- CPKC repurchased 11,542,470 Common Shares for $1,487 million during the three months ended September 30, 2026, at a weighted-average price per share of $128.80.
- CPKC repurchased 28,134,076 Common Shares for $3,431 million during the nine months ended September 30, 2026, at a weighted-average price per share of $121.95.
- The normal course issuer bid commenced February 2, 2026 and permits purchases of up to 44.9 million Common Shares on or before February 1, 2027.
What drove it
- Total freight revenue increased 15%, with grain revenue up 29%, intermodal revenue up 22%, and metals, minerals and consumer products revenue up 16%.
- Freight revenue per revenue ton-mile increased 9% to 7.20 cents, while freight revenue per carload increased 10% to $3,475.
- Average fuel price increased 53% to 4.49 U.S. dollars per U.S. gallon, and fuel expense increased 61% to $667 million.
- Average terminal dwell improved 7% to 9.4 hours, average train speed improved 8% to 20.5 miles per hour, and locomotive productivity improved 4% to 169.
- Higher fuel prices unfavourably impacted reported operating ratio by 170 basis points and core adjusted operating ratio by 190 basis points.
Concerns
- Reported operating ratio increased 130 basis points to 64.8 percent because operating expenses increased 18%, faster than total revenue growth of 15%.
- The effective income tax rate was 32.79%, including a $94 million income tax expense related to reassessment of prior-year taxes by the CRA and a $17 million income tax expense related to a SAT tax settlement.
- Coal revenue was $254 million, with revenue ton-miles down 11%, while automotive revenue ton-miles declined 5%.
- The 2014 Mexican tax assessment, including inflation, interest and penalties, was Ps. 6,710 million ($528 million) as at September 30, 2026; CPKCM has submitted an Amparo appeal and CPKC filed an ICSID Request for Arbitration.
What to watch
- Whether grain, intermodal and merchandise growth continues to offset declines in coal, automotive and potash traffic measures.
- Fuel prices, which rose to 4.49 U.S. dollars per U.S. gallon and were the stated primary pressure on operating ratio.
- The resolution and financial effects of the CRA reassessment, Mexican tax matters and the 2014 tax assessment.
- Execution against management's statement that CPKC remains on track to meet its commitments for 2026.
- The pace of share repurchases, debt issuance and commercial-paper borrowings following the October 6, 2026 notes issuance.
Balance sheet and cash flow
- Cash and cash equivalents were $399 million as at September 30, 2026, compared with $184 million as at December 31, 2025.
- Long-term debt maturing within one year was $3,613 million and long-term debt was $22,233 million as at September 30, 2026.
- Long-term debt, including current maturities, had a carrying value of $23,668 million and a fair value of $20,954 million as at September 30, 2026.
- Commercial paper borrowings outstanding were U.S. $1,535 million ($2,179 million) as at September 30, 2026, with a weighted-average interest rate of 2.87%.
- The revolving credit facility was undrawn as at September 30, 2026.
- Net cash used in investing activities was $(580) million in the third quarter and $(2,014) million in the nine months ended September 30, 2026.
- On October 6, 2026, CPKC issued $500 million, $550 million, $300 million and $450 million of unsecured notes, for net proceeds of $498 million, $547 million, $297 million and $443 million, respectively.
Analysis
CPKC reported third-quarter total revenues of $4,219 million, up 15% from $3,661 million, with freight revenues of $4,139 million up 15%. The growth was broad across key markets highlighted by management. Grain revenue increased 29% to $904 million, intermodal revenue increased 22% to $815 million, and metals, minerals and consumer products revenue increased 16% to $532 million. Traffic also advanced, with total revenue ton-miles up 6% and total carloads up 5%. Coal was flat at $254 million despite an 11% decline in revenue ton-miles, while automotive traffic measures also declined.
Pricing and mix supported revenue growth. Total freight revenue per revenue ton-mile increased 9% to 7.20 cents and freight revenue per carload increased 10% to $3,475. However, operating expenses rose 18% to $2,732 million, exceeding total revenue growth. Fuel expense increased 61% to $667 million as the average fuel price increased 53% to 4.49 U.S. dollars per U.S. gallon. Reported operating income still increased 11% to $1,487 million, but reported operating ratio increased 130 basis points to 64.8 percent. Core adjusted operating ratio increased 120 basis points to 61.9 percent, and the company stated that higher fuel prices unfavourably impacted reported and core adjusted operating ratio by 170 basis points and 190 basis points, respectively.
GAAP net income was $916 million, essentially unchanged from $917 million, and diluted EPS increased 3% to $1.04. Core adjusted diluted EPS increased 16% to $1.28. The difference reflects items excluded from the non-GAAP measure, including $94 million of KCS purchase accounting, $17 million of advisory costs related to rail consolidation matters, $12 million of acquisition-related costs, a $94 million income tax expense related to a CRA reassessment, and a $17 million income tax expense related to the SAT settlement. The effective income tax rate was 32.79%, compared with 24.34% in the prior-year quarter.
Cash generation strengthened, with net cash provided by operating activities of $1,550 million compared with $1,274 million, while additions to properties were $(613) million compared with $(860) million. CPKC returned capital through $1,487 million of share repurchases and $236 million of dividends paid in the quarter. Cash and cash equivalents were $399 million at September 30, 2026, while long-term debt maturing within one year and long-term debt were $3,613 million and $22,233 million, respectively. Management gave no numerical forward guidance in the supplied release but stated it remains on track to meet its commitments for 2026.
Management, verbatim
CPKC delivered solid results, powered by momentum across our unrivalled North American network, countering macroeconomic headwinds during the quarter.
Keith Creel, CPKC President and Chief Executive Officer
The railroad is running very well, our service remains strong, and we continue to deliver growth across key markets, including grain, intermodal and merchandise.
Keith Creel, CPKC President and Chief Executive Officer
Driven by our dedicated team of railroaders and the unique advantages of our North American network, we remain confident in our ability to safely drive growth, create value for customers and generate long-term returns for shareholders.
Keith Creel, CPKC President and Chief Executive Officer
Not in the filing
stated, not guessed- Numerical forward revenue, operating ratio, earnings, capital expenditure, tax-rate or other financial guidance was not provided.
- Prior-period outlook was not provided.
- Gross profit and gross margin were not reported.
- Reported free cash flow and adjusted free cash values were not included in the supplied filing text.
- Sequential quarterly comparisons were not reported for the financial and commodity revenue metrics presented.
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure is checked against the filing text, and a metric the filing does not print, or whose value, prior period and change do not add up, is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
The filing is CP's first 8‑K earnings release for Q3 2026, providing fresh financial metrics.
Ticker impact
CP reported Q3 2026 results with $4.2B revenue, $1.04 EPS and a higher operating ratio.
slight pressure as investors weigh higher operating costs against revenue growth
Revenue up 15% is positive, but a 130 bps rise in operating ratio may dampen enthusiasm.
Market effects
Rail and transportation sector may see modest upside from volume growth but cost pressures could weigh on peers.
North American logistics market may benefit from CP's growth, though higher fuel costs could affect regional carriers.
Limited; primarily impacts North American freight and related industrial stocks.
Counterpoint
Higher operating ratio signals margin compression; a short position could profit if costs rise further.
Key entities
- ExecutiveKeith Creel
President and CEO of CP, quoted in the release.
