Canadian Pacific Kansas City (CP) Q4 2025 earnings summary

Executive summary

• Fourth quarter revenue reached CAD 3.9 billion (USD 3.9B), up 1% year-over-year, with an industry-best core adjusted operating ratio of 55.9 and core adjusted EPS of CAD 1.33, up 3%.

• Full year 2025 revenue was CAD 15.1 billion (USD 15.1B), up 4%, with core adjusted EPS of CAD 4.61, up 8%, and reported diluted EPS of CAD 4.51, up 13%.

• Record safety performance and operational metrics were achieved, including the lowest FRA-reportable train accident frequency among Class 1 railroads for the third consecutive year.

• Disciplined capital investment included the addition of 100 new locomotives in 2025, with another 100 scheduled for 2026.

• Announced a new 5% share buyback program for 2026, reflecting strong cash generation and disciplined capital allocation.

Financial highlights

• Q4 core adjusted operating ratio improved 120 bps to 55.9%; diluted EPS was CAD 1.20, core adjusted EPS CAD 1.33, up 3%.

• Full year core adjusted operating ratio improved 140 bps to 59.9%; core adjusted EPS CAD 4.61, up 8.8%.

• Q4 operating income rose 3% to $1.61B; full-year operating income up 8% to $5.61B.

• Net cash from operating activities increased 1% to CAD 5.3 billion; CapEx was CAD 3.1 billion, above outlook due to accelerated maintenance.

• Fuel expense declined 8% year-over-year, mainly due to elimination of Canadian carbon tax and efficiency gains.

Outlook and guidance

• 2026 guidance targets low double-digit core adjusted diluted EPS growth from 2025’s $4.61, and mid-single-digit volume growth in RTMs.

• Capital expenditures for 2026 are projected at $2.65B, a 15% reduction from 2025.

• Growth drivers include record grain harvests in Canada and the U.S., intermodal expansion, and new service offerings.

• Expect core adjusted effective tax rate of approximately 24.75% in 2026.