Canadian Pacific Kansas City Ltd. (CP) Stock Valuation — PE Analysis
Railroads · NYSE
Current Price
$89.00
PE Ratio (TTM)
25.1x
Intrinsic Value
$115.11
+22.7% margin of safety
COMPETITIVE MOAT
↑Integrated North American Network
CPKC's unique transcontinental network connects Canada, the US, and Mexico. This integration offers unparalleled reach and efficiency for shippers, creating a significant competitive advantage.
↑High Switching Costs for Customers
Shifting rail freight to another carrier involves substantial costs and logistical complexities. This locks in customers and provides pricing power for CPKC.
↑Economies of Scale in Rail
Operating a vast rail network requires immense capital investment. CPKC benefits from economies of scale, making it difficult for new entrants to compete on cost.
INVESTMENT RISKS
↓Labor Relations and Strikes
Recent IBEW strike notices highlight ongoing labor challenges. Disruptions can halt operations, impacting revenue and customer relationships.
↓Regulatory and Environmental Scrutiny
The railroad industry faces strict regulations and increasing environmental concerns. New policies or compliance costs could impact profitability.
↓Economic Sensitivity and Commodity Cycles
CPKC's freight volumes are tied to economic health and commodity prices. Downturns or price volatility can reduce demand for their services.
Base case
CP base case PE valuation
A base case PE valuation for CP estimates a fair value of about $115.11 per share, against a current price of $89. The model assumes 11.9% annual earnings growth, a 25x target PE multiple, and a 10% discount rate.
Intrinsic Value
$115.11
Margin of safety
+22.7%
Expected annual return
+5.3%
Base case assumptions: 11.9% annual earnings growth, 25x target PE, 10% discount rate, 5 year projection. Data as of 2026-06-15.
This base case uses default assumptions and is not financial advice. The fair value changes significantly when the target PE or earnings growth rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the CP PE valuation
Adjust the target PE, earnings growth, and discount rate to see how the fair value and margin of safety for Canadian Pacific Kansas City Ltd. respond.
Open PE Calculator for CPCompany Overview
Specializing in railway freight transportation, Canadian Pacific Kansas City Ltd. operates an extensive rail network connecting Canada, the United States, and Mexico. The company, headquartered in Calgary, Canada, began its operations on June 22, 2001.
Financial Metrics — CP PE Stock Valuation Data
PE Ratio (TTM)
25.1x
PEG Ratio
1.39
Earnings Yield
3.98%
ROE (TTM)
8.8%
Revenue/Share (TTM)
$18.32
Dividend Yield
0.73%
Debt/Equity
0.52x
Frequently Asked Questions
What is the PE ratio of CP?
The trailing twelve-month PE ratio of CP reflects how much investors pay per dollar of Canadian Pacific Kansas City Ltd.'s earnings. This metric is most useful when compared to Railroads peers and the company's own historical range.
Is CP overvalued based on PE ratio?
CP's PE of 25.1x combined with a PEG ratio of 1.39 provides a growth-adjusted perspective. A PEG near 1.0 suggests the PE ratio is reasonably justified by the earnings growth rate. Keep in mind that PE-based valuation works best for profitable, mature companies — for high-growth or cyclical Railroads, a DCF analysis may be more appropriate.
How do I value CP stock using PE ratio?
To value Canadian Pacific Kansas City Ltd. using PE: (1) Compare the current PE (25.1x) against the Railroads median to assess relative pricing, (2) check the PEG ratio (1.39) to adjust for growth expectations, (3) review the 5-year PE range to identify where the stock sits historically, and (4) estimate fair value by multiplying a target PE by forward EPS estimates. This relative approach complements DCF's absolute valuation.
What is the PEG ratio of CP?
CP's PEG ratio is 1.39, calculated by dividing the PE ratio (25.1x) by the expected earnings growth rate. A PEG near 1.0 suggests the stock is fairly priced relative to growth. Note that PEG accuracy depends on the reliability of growth estimates.
Should I use PE ratio or DCF for CP stock valuation?
PE ratio gives a quick relative read — how CP is priced versus Railroads peers. DCF provides an absolute value based on projected free cash flows. For the most reliable valuation, use PE as a quick comparability screen and DCF for a deeper fundamental analysis. Each method has blind spots: PE ignores capital structure and cash flow quality, while DCF is sensitive to growth and discount rate assumptions.
Learn More
- See CP DCF Valuation → — Intrinsic value via Discounted Cash Flow analysis
- PE Methodology — Step-by-step guide to PE ratio stock valuation
- DCF Methodology — Guide to discounted cash flow analysis
- PE Ratio — Understanding the price-to-earnings ratio
- Intrinsic Value — How to evaluate stock fair value
Related PE Valuations
All Industrials valuationsP/E and DCF value CP with different methods and assumptions, so the two conclusions can differ. Compare the DCF intrinsic value.
Price as of 2026-06-15. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.