Intrinsic value of Canadian Pacific Railway - CP

Previous Close

$207.39

  Intrinsic Value

$117.81

stock screener

  Rating & Target

sell

-43%

Previous close

$207.39

 
Intrinsic value

$117.81

 
Up/down potential

-43%

 
Rating

sell

We calculate the intrinsic value of CP stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 29.6

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  6.50
  6.35
  6.21
  6.09
  5.98
  5.89
  5.80
  5.72
  5.65
  5.58
  5.52
  5.47
  5.42
  5.38
  5.34
  5.31
  5.28
  5.25
  5.23
  5.20
  5.18
  5.16
  5.15
  5.13
  5.12
  5.11
  5.10
  5.09
  5.08
  5.07
Revenue, $m
  6,980
  7,423
  7,885
  8,365
  8,866
  9,387
  9,932
  10,499
  11,092
  11,711
  12,358
  13,034
  13,741
  14,481
  15,254
  16,064
  16,912
  17,800
  18,730
  19,704
  20,726
  21,796
  22,918
  24,094
  25,328
  26,621
  27,978
  29,402
  30,895
  32,461
Variable operating expenses, $m
  2,316
  2,462
  2,614
  2,772
  2,937
  3,109
  3,288
  3,475
  3,670
  3,873
  4,068
  4,290
  4,523
  4,766
  5,021
  5,287
  5,567
  5,859
  6,165
  6,486
  6,822
  7,174
  7,543
  7,931
  8,337
  8,762
  9,209
  9,677
  10,169
  10,685
Fixed operating expenses, $m
  1,654
  1,690
  1,727
  1,765
  1,804
  1,844
  1,884
  1,926
  1,968
  2,011
  2,056
  2,101
  2,147
  2,194
  2,243
  2,292
  2,342
  2,394
  2,447
  2,500
  2,555
  2,612
  2,669
  2,728
  2,788
  2,849
  2,912
  2,976
  3,041
  3,108
Total operating expenses, $m
  3,970
  4,152
  4,341
  4,537
  4,741
  4,953
  5,172
  5,401
  5,638
  5,884
  6,124
  6,391
  6,670
  6,960
  7,264
  7,579
  7,909
  8,253
  8,612
  8,986
  9,377
  9,786
  10,212
  10,659
  11,125
  11,611
  12,121
  12,653
  13,210
  13,793
Operating income, $m
  3,010
  3,271
  3,544
  3,828
  4,125
  4,435
  4,760
  5,099
  5,455
  5,827
  6,235
  6,643
  7,071
  7,520
  7,991
  8,485
  9,003
  9,547
  10,119
  10,718
  11,348
  12,010
  12,706
  13,436
  14,203
  15,010
  15,858
  16,748
  17,685
  18,669
EBITDA, $m
  3,729
  4,034
  4,353
  4,685
  5,032
  5,395
  5,774
  6,170
  6,585
  7,019
  7,474
  7,950
  8,449
  8,971
  9,520
  10,095
  10,698
  11,331
  11,996
  12,693
  13,426
  14,195
  15,003
  15,851
  16,742
  17,678
  18,662
  19,695
  20,781
  21,922
Interest expense (income), $m
  361
  457
  505
  557
  611
  667
  725
  786
  850
  916
  985
  1,058
  1,133
  1,212
  1,295
  1,381
  1,472
  1,566
  1,665
  1,769
  1,878
  1,991
  2,111
  2,236
  2,367
  2,504
  2,648
  2,799
  2,958
  3,124
  3,299
Earnings before tax, $m
  2,553
  2,766
  2,987
  3,217
  3,458
  3,710
  3,973
  4,249
  4,538
  4,841
  5,177
  5,510
  5,859
  6,225
  6,610
  7,013
  7,437
  7,882
  8,350
  8,841
  9,357
  9,900
  10,470
  11,069
  11,699
  12,362
  13,058
  13,790
  14,560
  15,370
Tax expense, $m
  689
  747
  806
  869
  934
  1,002
  1,073
  1,147
  1,225
  1,307
  1,398
  1,488
  1,582
  1,681
  1,785
  1,894
  2,008
  2,128
  2,254
  2,387
  2,526
  2,673
  2,827
  2,989
  3,159
  3,338
  3,526
  3,723
  3,931
  4,150
Net income, $m
  1,864
  2,019
  2,180
  2,348
  2,524
  2,708
  2,901
  3,102
  3,313
  3,534
  3,779
  4,022
  4,277
  4,544
  4,825
  5,120
  5,429
  5,754
  6,095
  6,454
  6,831
  7,227
  7,643
  8,080
  8,540
  9,024
  9,532
  10,067
  10,629
  11,220

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  21,411
  22,771
  24,186
  25,660
  27,195
  28,796
  30,465
  32,207
  34,025
  35,924
  37,908
  39,982
  42,151
  44,419
  46,792
  49,276
  51,877
  54,601
  57,454
  60,443
  63,575
  66,858
  70,300
  73,909
  77,692
  81,661
  85,823
  90,189
  94,769
  99,575
Adjusted assets (=assets-cash), $m
  21,411
  22,771
  24,186
  25,660
  27,195
  28,796
  30,465
  32,207
  34,025
  35,924
  37,908
  39,982
  42,151
  44,419
  46,792
  49,276
  51,877
  54,601
  57,454
  60,443
  63,575
  66,858
  70,300
  73,909
  77,692
  81,661
  85,823
  90,189
  94,769
  99,575
Revenue / Adjusted assets
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
Average production assets, $m
  18,050
  19,197
  20,390
  21,632
  22,926
  24,276
  25,683
  27,152
  28,685
  30,285
  31,958
  33,706
  35,535
  37,447
  39,448
  41,542
  43,734
  46,031
  48,436
  50,956
  53,596
  56,364
  59,266
  62,308
  65,498
  68,843
  72,352
  76,033
  79,894
  83,945
Working capital, $m
  -321
  -341
  -363
  -385
  -408
  -432
  -457
  -483
  -510
  -539
  -568
  -600
  -632
  -666
  -702
  -739
  -778
  -819
  -862
  -906
  -953
  -1,003
  -1,054
  -1,108
  -1,165
  -1,225
  -1,287
  -1,352
  -1,421
  -1,493
Total debt, $m
  9,021
  9,945
  10,907
  11,910
  12,954
  14,042
  15,177
  16,362
  17,598
  18,889
  20,239
  21,649
  23,123
  24,666
  26,280
  27,969
  29,738
  31,590
  33,530
  35,562
  37,692
  39,925
  42,265
  44,719
  47,292
  49,990
  52,821
  55,789
  58,904
  62,172
Total liabilities, $m
  14,560
  15,484
  16,446
  17,449
  18,493
  19,581
  20,716
  21,901
  23,137
  24,428
  25,778
  27,188
  28,662
  30,205
  31,819
  33,508
  35,277
  37,129
  39,069
  41,101
  43,231
  45,464
  47,804
  50,258
  52,831
  55,529
  58,360
  61,328
  64,443
  67,711
Total equity, $m
  6,852
  7,287
  7,739
  8,211
  8,702
  9,215
  9,749
  10,306
  10,888
  11,496
  12,131
  12,794
  13,488
  14,214
  14,974
  15,768
  16,601
  17,472
  18,385
  19,342
  20,344
  21,395
  22,496
  23,651
  24,862
  26,131
  27,463
  28,860
  30,326
  31,864
Total liabilities and equity, $m
  21,412
  22,771
  24,185
  25,660
  27,195
  28,796
  30,465
  32,207
  34,025
  35,924
  37,909
  39,982
  42,150
  44,419
  46,793
  49,276
  51,878
  54,601
  57,454
  60,443
  63,575
  66,859
  70,300
  73,909
  77,693
  81,660
  85,823
  90,188
  94,769
  99,575
Debt-to-equity ratio
  1.320
  1.360
  1.410
  1.450
  1.490
  1.520
  1.560
  1.590
  1.620
  1.640
  1.670
  1.690
  1.710
  1.740
  1.760
  1.770
  1.790
  1.810
  1.820
  1.840
  1.850
  1.870
  1.880
  1.890
  1.900
  1.910
  1.920
  1.930
  1.940
  1.950
Adjusted equity ratio
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,864
  2,019
  2,180
  2,348
  2,524
  2,708
  2,901
  3,102
  3,313
  3,534
  3,779
  4,022
  4,277
  4,544
  4,825
  5,120
  5,429
  5,754
  6,095
  6,454
  6,831
  7,227
  7,643
  8,080
  8,540
  9,024
  9,532
  10,067
  10,629
  11,220
Depreciation, amort., depletion, $m
  718
  763
  809
  857
  907
  960
  1,014
  1,071
  1,131
  1,193
  1,239
  1,306
  1,377
  1,451
  1,529
  1,610
  1,695
  1,784
  1,877
  1,975
  2,077
  2,185
  2,297
  2,415
  2,539
  2,668
  2,804
  2,947
  3,097
  3,254
Funds from operations, $m
  2,582
  2,782
  2,989
  3,206
  3,432
  3,668
  3,915
  4,173
  4,443
  4,726
  5,018
  5,329
  5,654
  5,996
  6,354
  6,730
  7,124
  7,538
  7,973
  8,429
  8,908
  9,411
  9,940
  10,495
  11,079
  11,692
  12,337
  13,014
  13,726
  14,474
Change in working capital, $m
  -20
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -30
  -31
  -33
  -34
  -36
  -37
  -39
  -41
  -43
  -45
  -47
  -49
  -52
  -54
  -57
  -60
  -62
  -65
  -69
  -72
Cash from operations, $m
  2,602
  2,802
  3,010
  3,228
  3,455
  3,692
  3,940
  4,199
  4,471
  4,755
  5,048
  5,360
  5,687
  6,030
  6,390
  6,767
  7,163
  7,579
  8,015
  8,474
  8,955
  9,461
  9,992
  10,550
  11,136
  11,752
  12,399
  13,079
  13,794
  14,546
Maintenance CAPEX, $m
  -657
  -700
  -744
  -790
  -838
  -889
  -941
  -995
  -1,052
  -1,112
  -1,174
  -1,239
  -1,306
  -1,377
  -1,451
  -1,529
  -1,610
  -1,695
  -1,784
  -1,877
  -1,975
  -2,077
  -2,185
  -2,297
  -2,415
  -2,539
  -2,668
  -2,804
  -2,947
  -3,097
New CAPEX, $m
  -1,101
  -1,146
  -1,193
  -1,242
  -1,294
  -1,349
  -1,407
  -1,468
  -1,533
  -1,601
  -1,673
  -1,748
  -1,828
  -1,912
  -2,001
  -2,094
  -2,193
  -2,296
  -2,405
  -2,520
  -2,641
  -2,768
  -2,901
  -3,042
  -3,190
  -3,345
  -3,509
  -3,681
  -3,861
  -4,051
Cash from investing activities, $m
  -1,758
  -1,846
  -1,937
  -2,032
  -2,132
  -2,238
  -2,348
  -2,463
  -2,585
  -2,713
  -2,847
  -2,987
  -3,134
  -3,289
  -3,452
  -3,623
  -3,803
  -3,991
  -4,189
  -4,397
  -4,616
  -4,845
  -5,086
  -5,339
  -5,605
  -5,884
  -6,177
  -6,485
  -6,808
  -7,148
Free cash flow, $m
  844
  957
  1,073
  1,195
  1,322
  1,454
  1,592
  1,735
  1,885
  2,042
  2,201
  2,373
  2,552
  2,740
  2,937
  3,144
  3,360
  3,588
  3,826
  4,076
  4,339
  4,615
  4,906
  5,210
  5,531
  5,868
  6,222
  6,594
  6,986
  7,398
Issuance/(repayment) of debt, $m
  862
  925
  962
  1,002
  1,044
  1,088
  1,135
  1,184
  1,236
  1,291
  1,349
  1,410
  1,475
  1,542
  1,614
  1,689
  1,769
  1,852
  1,940
  2,033
  2,130
  2,233
  2,340
  2,454
  2,573
  2,698
  2,830
  2,969
  3,115
  3,268
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  862
  925
  962
  1,002
  1,044
  1,088
  1,135
  1,184
  1,236
  1,291
  1,349
  1,410
  1,475
  1,542
  1,614
  1,689
  1,769
  1,852
  1,940
  2,033
  2,130
  2,233
  2,340
  2,454
  2,573
  2,698
  2,830
  2,969
  3,115
  3,268
Total cash flow (excl. dividends), $m
  1,706
  1,881
  2,036
  2,197
  2,366
  2,542
  2,727
  2,920
  3,122
  3,334
  3,550
  3,783
  4,027
  4,283
  4,551
  4,833
  5,129
  5,440
  5,766
  6,109
  6,469
  6,848
  7,246
  7,664
  8,104
  8,566
  9,052
  9,563
  10,101
  10,666
Retained Cash Flow (-), $m
  -415
  -435
  -453
  -472
  -491
  -512
  -534
  -557
  -582
  -608
  -635
  -664
  -694
  -726
  -759
  -795
  -832
  -872
  -913
  -957
  -1,002
  -1,051
  -1,101
  -1,155
  -1,211
  -1,270
  -1,332
  -1,397
  -1,466
  -1,538
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  1,291
  1,446
  1,583
  1,726
  1,874
  2,030
  2,192
  2,362
  2,540
  2,726
  2,915
  3,119
  3,333
  3,557
  3,792
  4,038
  4,297
  4,568
  4,853
  5,152
  5,467
  5,797
  6,145
  6,509
  6,893
  7,296
  7,720
  8,166
  8,635
  9,128
Discount rate, %
  7.30
  7.67
  8.05
  8.45
  8.87
  9.32
  9.78
  10.27
  10.79
  11.32
  11.89
  12.49
  13.11
  13.77
  14.45
  15.18
  15.93
  16.73
  17.57
  18.45
  19.37
  20.34
  21.35
  22.42
  23.54
  24.72
  25.96
  27.25
  28.62
  30.05
PV of cash for distribution, $m
  1,203
  1,247
  1,255
  1,247
  1,225
  1,190
  1,141
  1,081
  1,010
  932
  847
  760
  672
  585
  500
  421
  348
  282
  224
  174
  133
  99
  72
  51
  35
  23
  15
  10
  6
  3
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Canadian Pacific Railway Limited, together with its subsidiaries, owns and operates a transcontinental freight railway in Canada and the United States. The Company operates through rail transportation segment. The Company's transports bulk commodities, merchandise freight, and intermodal traffic over a network of approximately 12,400 miles. Its railway feeds directly into the United States heartland from the east and west coasts. Its Bulk commodities include grain, coal, potash, fertilizers and sulfur. Its Merchandise freight consists of finished vehicles and machinery, as well as forest and industrial and consumer products. Its Intermodal traffic consists of retail goods in overseas containers that can be transported by train, ship and truck and in domestic containers and trailers that can be moved by train and truck. Its subsidiaries include Canadian Pacific Railway Company, Soo Line Railroad Company, Delaware and Hudson Railway Company, Inc. and Mount Stephen Properties Inc.

FINANCIAL RATIOS  of  Canadian Pacific Railway (CP)

Valuation Ratios
P/E Ratio 25.6
Price to Sales 6.6
Price to Book 8.9
Price to Tangible Book
Price to Cash Flow 19.6
Price to Free Cash Flow 45.2
Growth Rates
Sales Growth Rate -7.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -22.4%
Cap. Spend. - 3 Yr. Gr. Rate -0.9%
Financial Strength
Quick Ratio 6
Current Ratio 0.1
LT Debt to Equity 187.1%
Total Debt to Equity 187.7%
Interest Coverage 5
Management Effectiveness
Return On Assets 10.1%
Ret/ On Assets - 3 Yr. Avg. 9.6%
Return On Total Capital 11.8%
Ret/ On T. Cap. - 3 Yr. Avg. 11.7%
Return On Equity 33.9%
Return On Equity - 3 Yr. Avg. 27.7%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 88%
Gross Margin - 3 Yr. Avg. 85.3%
EBITDA Margin 52.6%
EBITDA Margin - 3 Yr. Avg. 46.5%
Operating Margin 41%
Oper. Margin - 3 Yr. Avg. 38.8%
Pre-Tax Margin 34.5%
Pre-Tax Margin - 3 Yr. Avg. 31.5%
Net Profit Margin 25.6%
Net Profit Margin - 3 Yr. Avg. 22.7%
Effective Tax Rate 25.7%
Eff/ Tax Rate - 3 Yr. Avg. 28.1%
Payout Ratio 16%

CP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CP stock intrinsic value calculation we used $6554 million for the last fiscal year's total revenue generated by Canadian Pacific Railway. The default revenue input number comes from 0001 income statement of Canadian Pacific Railway. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our CP stock valuation model: a) initial revenue growth rate of 6.5% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 7.3%, whose default value for CP is calculated based on our internal credit rating of Canadian Pacific Railway, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Canadian Pacific Railway.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of CP stock the variable cost ratio is equal to 33.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $1618 million in the base year in the intrinsic value calculation for CP stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.6% for Canadian Pacific Railway.

Corporate tax rate of 27% is the nominal tax rate for Canadian Pacific Railway. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the CP stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for CP are equal to 258.6%.

Life of production assets of 25.8 years is the average useful life of capital assets used in Canadian Pacific Railway operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for CP is equal to -4.6%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $6437 million for Canadian Pacific Railway - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 142.574 million for Canadian Pacific Railway is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Canadian Pacific Railway at the current share price and the inputted number of shares is $29.6 billion.

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COMPANY NEWS

▶ Canadian Pacific Railway Limited declares dividend   [Sep-17-18 06:49PM  CNW Group]
▶ Steve Mandel's Top 3 Buys for 2nd Quarter   [Aug-23-18 06:32PM  GuruFocus.com]
▶ TCRC-T&E ratify four-year agreement with CP   [Jul-20-18 01:19PM  PR Newswire]
▶ Stock Market Retreats; Trump Tariffs Slam Alcoa   [Jul-19-18 10:17AM  Investor's Business Daily]
▶ Canadian Pacific: 2Q Earnings Snapshot   [04:10PM  Associated Press]
▶ [$$] Canadian Pacific Railway Strike Ends   [May-30-18 08:09PM  The Wall Street Journal]
▶ [$$] Canadian Pacific Railway Strike Ends   [03:41PM  The Wall Street Journal]
▶ [$$] Workers Strike at Canadian Pacific Railway   [11:26AM  The Wall Street Journal]
▶ [$$] Canadian Pacific Teamsters, Electrical Workers File Strike Notice   [May-28-18 11:52PM  The Wall Street Journal]
▶ Stifel Rides The Rails, Initiates Seven Stocks   [May-24-18 12:42PM  Benzinga]
▶ Value-Adding TSX Stocks   [May-17-18 07:02AM  Simply Wall St.]

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