Canadian Pacific Posts Lingering Q4 Volume Strength, but Top-Line Growth Will Ease in 2023

Wide-moat rail Canadian Pacific Railway’s fourth-quarter revenue grew 16% year over year (removing foreign exchange) on higher fuel surcharges, core rate gains, and overall volume growth. Revenue came in slightly ahead of our forecast as strong yield gains (up 11%) offset lower-than-expected total-volume growth. We suspect the volume shortfall relative to our forecast stems from a customer coal mine outage (Teck Resources) and cold-weather disruption.