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What investors are saying about Canadian Pacific Kansas City (CP)
Summary
In the past 30 days, 2 people on 1 investor and market show discussed Canadian Pacific Kansas City (CP) in 34 views. Going by each speaker's latest call, 1 is bullish and 1 is bearish. Chorus has followed Canadian Pacific Kansas City since November 12, 2026.
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Kyle Grieve · The Investor's Podcast NetworkUncertain
Kansas City Southern integration pains are not over, which is why CPKC's growth looks weak.
The $31B Kansas City Southern acquisition brought large integration problems. Kyle does not think they are finished, and that is why recent growth looks poor even though the combined scale is hard to match. He sees the strategic logic as strong but treats the near-term growth as unresolved.
“...And I don't really think that they're over yet, which is why the growth hasn't looked very good.”at 8:21
We Study Billionaires: TIP860: Canadian Pacific Kansas City Limited (CP.TO): Irreplaceable Moat, Unproven Compounding w/ Kyle Grieve & Shawn O'Malley ·
Kyle Grieve · The Investor's Podcast NetworkBullish
CPKC's three-country rail network is nearly impossible to replicate, with replacement cost of $250-500B.
CPKC is the only railroad running through Canada, the US and Mexico on one network, which Kyle calls strategically a masterpiece that no competitor can copy. Replicating it would require contiguous land strips across three countries that are at odds with each other, permits that are very hard to get, and tens of billions before any revenue. CPKC carries about $57B of property and $22B of goodwill and intangibles, but Kyle argues that understates replacement cost. He estimates legacy CP's roughly $2M per mile should be $8-20M per mile today, putting full replacement at $250-500B. Exclusive freight rights on the Mexico corridor through 2047 and the Laredo rail bridge add further irreplaceable assets.
“It's the first and only railroad to run through three different countries in North America. So strategically, it's really a masterpiece. No other railroad currently can replicate the network that they have.”at 8:32
We Study Billionaires: TIP860: Canadian Pacific Kansas City Limited (CP.TO): Irreplaceable Moat, Unproven Compounding w/ Kyle Grieve & Shawn O'Malley ·
Shawn O'Malley · The Investor's Podcast NetworkUncertain
Post-merger dilution has made CPKC's per-share results far less exciting than before the deal.
The Kansas City Southern deal was partly funded with new shares, raising the diluted share count by 37%. EPS growth has slowed to mid-single digits and the share price has compounded at about 5.5%, versus the much stronger 2012-2020 period. Shawn says the deal makes per-share results much less impressive. The thesis holds only if growth returns to historical rates; if it does not, he finds the business much less interesting. He also says CPKC and BNSF are not screaming buys on these numbers.
“the per share results have definitely been a lot less exciting than the decade that came before it. That is some pretty painful dilution”at 9:03
We Study Billionaires: TIP860: Canadian Pacific Kansas City Limited (CP.TO): Irreplaceable Moat, Unproven Compounding w/ Kyle Grieve & Shawn O'Malley ·
Shawn O'Malley · The Investor's Podcast NetworkBullish
Hunter Harrison's precision scheduled railroading lifted CPKC's margins from mid-teens to over 40%.
Precision scheduled railroading replaced the hold-for-tonnage system with fixed schedules. The railroad sets the timetable, runs fewer and longer trains, cuts idle locomotives and cars, and reduces yard dwell time, much like an airline. Under this system CP's operating margins rose from the mid-teens to over 40%, and the stock compounded at over 17% a year over the same period. Shawn says the system worked very well.
“And his system worked like crazy. Canadian Pacific's operating margins went from the mid teens all the way up to over 40% and the stock price compounded at over 17%”at 14:26
We Study Billionaires: TIP860: Canadian Pacific Kansas City Limited (CP.TO): Irreplaceable Moat, Unproven Compounding w/ Kyle Grieve & Shawn O'Malley ·
Kyle Grieve · The Investor's Podcast NetworkBullish
Hunter Harrison's operating overhaul made CP one of North America's best-run railroads, a rare margin expansion.
Under Bill Ackman's activist push, Hunter Harrison took CP from one of the least efficient railroads, with an operating ratio near 80%, to one of the best. Kyle calls the rapid margin expansion very impressive for any business and notes it is unusual for a boring railroad. The stock also compounded strongly in that period, with EPS growing about 26% a year from 2012 to 2020. Harrison's right-hand man Keith Creel has since led the company.
“I think Hunter Harrison's moves were very, very transformative for CP at this time for basically any business to go through a rapid margin expansion like that is very, very impressive.”at 15:14
We Study Billionaires: TIP860: Canadian Pacific Kansas City Limited (CP.TO): Irreplaceable Moat, Unproven Compounding w/ Kyle Grieve & Shawn O'Malley ·
Kyle Grieve · The Investor's Podcast NetworkNeutral
Q2 headline revenue growth was flattered by fuel surcharges; underlying growth is only mid-single digits.
In Q2 2026 revenue rose 13% while revenue ton-miles rose about 4%. Fuel surcharge revenue jumped 74%, adding roughly $258M as fuel prices rose. Kyle calls this cyclical and outside management's control, so it should not be read as organic growth. Stripping out the fuel surcharge and a record grain harvest, underlying revenue growth comes to the mid-single digits, close to the volume trend.
“...it's crucial not to confuse this for organic growth. So if you strip out the fuel and the record grain harvest, underlying revenue growth comes in the mid single digits”at 20:26
We Study Billionaires: TIP860: Canadian Pacific Kansas City Limited (CP.TO): Irreplaceable Moat, Unproven Compounding w/ Kyle Grieve & Shawn O'Malley ·
Kyle Grieve · The Investor's Podcast NetworkBullish
Rail's per-ton fuel and cost advantage over trucks secures long-haul heavy freight for CPKC.
Rail is roughly three to four times more fuel efficient per ton-mile than trucking, and one train can take hundreds of trucks off the road. For long hauls of heavy goods such as potash from Saskatchewan to Vancouver, rail wins almost every time. That cost advantage gives CPKC a durable base of bulk freight demand.
“So the answer is that rail is roughly three to four times more fuel efficient per ton mile than trucking. Additionally, one train can take hundreds of trucks off the road.”at 21:43
We Study Billionaires: TIP860: Canadian Pacific Kansas City Limited (CP.TO): Irreplaceable Moat, Unproven Compounding w/ Kyle Grieve & Shawn O'Malley ·
Shawn O'Malley · The Investor's Podcast NetworkNeutral
CPKC's irreplaceable rail assets do not guarantee unlimited pricing power or strong growth.
Shawn accepts that no one can build a new railroad, but argues this does not let CPKC charge whatever it wants. He points to BNSF, which owns comparably irreplaceable rail lines, yet has compounded revenue and pre-tax income at under 3% since Berkshire bought it. A scarce asset is a precondition for returns, not a guarantee of them.
“the fact that pretty much nobody can go out and build a new railroad doesn't mean that Canadian Pacific Kansas City can go out there and just charge whatever price they want to. It doesn't give them unlimited pricing power.”at 29:42
We Study Billionaires: TIP860: Canadian Pacific Kansas City Limited (CP.TO): Irreplaceable Moat, Unproven Compounding w/ Kyle Grieve & Shawn O'Malley ·
Shawn O'Malley · The Investor's Podcast NetworkBullish
Canada and Mexico rail duopolies and oligopolies should keep pricing disciplined and returns improving.
In Canada CPKC and CN are a duopoly, in the US there are only six Class I railroads, and in Mexico Ferromex (about a quarter owned by Union Pacific) is a similar structure. With only a few rational players, nobody gains from a price war, so pricing tends to drift up and returns on capital improve. Shawn compares this to Uber and Lyft settling market share, stopping subsidies and then raising take rates. He says this structure is a big reason the firm likes these businesses.
“When there are only a handful of rational players in the market, nobody has much of an incentive to start a price war and so pricing tends to drift upward over time and returns on capital tend to improve accordingly.”at 33:18
We Study Billionaires: TIP860: Canadian Pacific Kansas City Limited (CP.TO): Irreplaceable Moat, Unproven Compounding w/ Kyle Grieve & Shawn O'Malley ·
Kyle Grieve · The Investor's Podcast NetworkNeutral
The rail moat protects CPKC's existence but not its pricing power, since trucks and CN compete.
Kyle says the network's scarcity makes it a durable business, but because freight can move by truck or by rival rail, the moat does not secure pricing. Trucks are the main competitor for shorter and more flexible routes. Canadian National competes directly with CPKC for bulk traffic from the Prairies. Kyle wants that competitive pressure separated from the scarcity argument.
“So the moat that we just discussed definitely protects Canadian Pacific Kansas City's existence, but because there are different ways to move freight, it doesn't really protect its pricing power.”at 35:51
We Study Billionaires: TIP860: Canadian Pacific Kansas City Limited (CP.TO): Irreplaceable Moat, Unproven Compounding w/ Kyle Grieve & Shawn O'Malley ·
Shawn O'Malley · The Investor's Podcast NetworkBearish
Mexico's power to force rail access for competitors is a troublesome regulatory lever for Canadian Pacific Kansas City.
US freight rail was deregulated in 1980 under the Staggers Act, and regulators there mainly prevent gouging of captive shippers rather than breaking up railroads. Canada caps Western grain revenue. Mexico is different: regulators can set rates or grant competitors access to a railroad's tracks. Shawn sees that as a troubling way to resolve disputes for shareholders, so this is where he is most nervous.
“probably where I'd get a little nervous is actually in Mexico, right, where a regulator can hand a competitor access to your tracks. That seems like a very troublesome lever to resolve disputes for shareholders.”at 38:20
We Study Billionaires: TIP860: Canadian Pacific Kansas City Limited (CP.TO): Irreplaceable Moat, Unproven Compounding w/ Kyle Grieve & Shawn O'Malley ·
Kyle Grieve · The Investor's Podcast NetworkNeutral
Canadian Pacific Kansas City has real pricing power, but trucks, rival CN and regulators cap how much it can raise prices.
Shorter routes favor trucks, which are faster and more flexible, and CN competes directly for bulk traffic from the Prairies. Captive shippers, such as a potash mine or grain elevator on a single CPKC track, have no alternative and face the least competition. Regulators in all three countries cap some of the upside: US rate cases, the Canadian Western grain revenue cap, and Mexican rate-setting and access powers. Still, Class I railroads have pushed through price increases above inflation for most of the last two decades, so pricing power exists, but with a ceiling. Regulation also keeps the industry stable and deters entrants.
“regulators obviously do cap some of the upside on the pricing... So, you know, the pricing power is still there, but there's definitely a ceiling in place.”at 38:46
We Study Billionaires: TIP860: Canadian Pacific Kansas City Limited (CP.TO): Irreplaceable Moat, Unproven Compounding w/ Kyle Grieve & Shawn O'Malley ·
Kyle Grieve · The Investor's Podcast NetworkBullish
Canadian Pacific Kansas City's operating ratio near 60% is among the best in the industry, after Hunter Harrison's scheduling reforms.
Hunter Harrison, the former CEO, implemented precision scheduled railroading at four of the six Class I railroads. The system greatly improved Canadian Pacific's margins and persisted after he left. The operating ratio of about 60% is among the best in the industry, though not by a wide margin. Operating improvements also include a 7% rise in average train speed, a 16% cut in terminal dwell time, and marginal gains in locomotive productivity and fuel efficiency. Reliable networks need fewer locomotives and cars to move the same freight.
“...that simple system, which he did implement has greatly improved Canadian Pacific Kansas City's margins and it stuck around for long after he's left. Canadian Pacific Kansas City still has operating ratios of about 60%, which is among the best in the industry.”at 38:46
We Study Billionaires: TIP860: Canadian Pacific Kansas City Limited (CP.TO): Irreplaceable Moat, Unproven Compounding w/ Kyle Grieve & Shawn O'Malley ·
Kyle Grieve · The Investor's Podcast NetworkBullish
Canadian Pacific Kansas City's three-country rail network is among the largest moats and cannot realistically be disrupted or replicated.
The network is nearly impossible to replicate. Technology cannot disrupt railroad infrastructure. A rival with $500 billion would likely spend it on data centers, not track and rail yards. Even existing railroads cannot build out the same network, and winning the know-how, permits and land would be very hard. Kyle also says the company scores very well on his customer loyalty framework, especially on sunk costs, high failure costs and setup costs that lock in repeat customers. Brand scores lowest, which he does not consider significant. The moat protects the business's existence, though it does not guarantee pricing power or returns, which he addresses separately.
“Overall, I think Canadian Pacific Kansas City has one of the largest moats in a business that I've ever seen. You know, it can't be disrupted by technology. And if someone had $500,000,000,000 to spend, chances are they just go build data centers, not train tracks and rail yards.”at 44:18
We Study Billionaires: TIP860: Canadian Pacific Kansas City Limited (CP.TO): Irreplaceable Moat, Unproven Compounding w/ Kyle Grieve & Shawn O'Malley ·
Shawn O'Malley · The Investor's Podcast NetworkBullish
Canadian Pacific Kansas City's depressed returns on capital should recover once merger synergies show up in results.
Shawn accepts that the roughly 7% ROIC is weak for a business with such a durable moat, and he would expect better returns. He argues that large M&A deals inflate the invested capital denominator immediately, while the synergies that lift income arrive more slowly. The $31 billion Kansas City Southern deal would have raised the capital base significantly, so returns need a large increase in profit just to hold efficiency. Since the railroad is not a worse business for being bigger, the return metrics should recover as synergies show up in the income statement.
“So if that's what's happening right now with Canadian Pacific Kansas City, then the assumption should be that their capital efficiency number, their returns on capital will recover once those synergies show up.”at 52:01
We Study Billionaires: TIP860: Canadian Pacific Kansas City Limited (CP.TO): Irreplaceable Moat, Unproven Compounding w/ Kyle Grieve & Shawn O'Malley ·
Kyle Grieve · The Investor's Podcast NetworkBearish
Canadian Pacific Kansas City's return on invested capital has fallen to about 7% from 14-17%, and it is not recovering.
Before the Kansas City Southern deal, adjusted ROIC was 14-17% from 2016 to 2020, which showed durability. It fell about 8% in 2021, 7% in 2022 and 6.9% in 2025. Adding back deferred tax liabilities, which the company excludes, would lower it about a point further. Operating margins have recovered and profits are rising, but three years of mediocre ROIC with little movement suggests this is not just a timing issue. He points to the large premium paid for Kansas City Southern, which permanently inflates the invested capital base through goodwill that does not depreciate. Returns on incremental invested capital have crept up to over 12%, which is encouraging, but management's mid-teens target remains hard to reach.
“But when it comes to capital efficiency, you know, the numbers just have barely budged. I think enough time has now passed that if this were a timing issue, we'd probably see the capital efficiency number at least approximate historical levels or get closer to that, but it's just not really moving.”at 53:09
We Study Billionaires: TIP860: Canadian Pacific Kansas City Limited (CP.TO): Irreplaceable Moat, Unproven Compounding w/ Kyle Grieve & Shawn O'Malley ·
Shawn O'Malley · The Investor's Podcast NetworkBearish
Canadian Pacific Kansas City's share buybacks over recent years were likely at or above intrinsic value, so they were poor capital allocation.
The company bought back 37 million shares for about $4 billion in 2025 and roughly 17 million more in the first half of 2026, reducing the share count by about 1% a year since 2022. Shawn thinks much of this was done at or above intrinsic value. When a company buys back shares above their value, the gain goes to the sellers and the remaining owners lose. A dividend or holding cash would have been better. He hedges that this holds unless his intrinsic value estimate is wrong. Kyle agrees, adding that some buybacks were partly funded with debt.
“I do have an issue with the buybacks though. I think much of the buybacks over the past few years, they seem to have been done at sort of, what I would call a rough approximation of exactly at intrinsic value or perhaps above it.”at 56:46
We Study Billionaires: TIP860: Canadian Pacific Kansas City Limited (CP.TO): Irreplaceable Moat, Unproven Compounding w/ Kyle Grieve & Shawn O'Malley ·
Shawn O'Malley · The Investor's Podcast NetworkNeutral
Canadian Pacific Kansas City's leverage of about 3.2 times is in line with peers, but the rising trend is worth watching.
Debt is about $25 billion and management's debt-to-EBITDA ratio is about 3.2 times, up from 3.0 times a year earlier. That is similar to peers such as Union Pacific and CSX. Railroads have predictable, long-lived cash flows that lenders value, so leverage here is acceptable. Shawn is more concerned with the direction of leverage and its purpose. He is uncomfortable if debt is rising to fund buybacks rather than growth.
“I don't think there's too much to worry about here. Railroads after all are businesses whose assets produce steady cash and that cash should continue to flow to them for decades to come.”at 58:53
We Study Billionaires: TIP860: Canadian Pacific Kansas City Limited (CP.TO): Irreplaceable Moat, Unproven Compounding w/ Kyle Grieve & Shawn O'Malley ·
Kyle Grieve · The Investor's Podcast NetworkUncertain
Canadian Pacific Kansas City's net debt is about 10 times free cash flow, far above his preferred level.
Kyle prefers net debt at or below about three times trailing free cash flow, so that a business could repay its debt within three years in a downturn. Canadian Pacific's ratio is about 10 times, so it is much higher than he likes. Free cash flow should expand, which could bring the ratio down to eight or nine times, but it is still high. Mitigating factors are the debt's long maturities, which run to 2115, and its strong interest coverage of more than six times by operating income. Railroads deserve leeway because their cash flows are secure over long periods.
“So Canadian Pacific Kansas City's net debt to free cash flow is actually 10 times. So they aren't planning on increasing CapEx. So perhaps that ratio comes down to eight or nine as free cash flow expands over the next year or so. But either way, it's definitely a lot higher than I usually like to see.”at 1:00:06
We Study Billionaires: TIP860: Canadian Pacific Kansas City Limited (CP.TO): Irreplaceable Moat, Unproven Compounding w/ Kyle Grieve & Shawn O'Malley ·
Shawn O'Malley · The Investor's Podcast NetworkBearish
Refinancing maturing debt at today's higher rates will sharply raise Canadian Pacific Kansas City's interest costs.
The bigger risk is not the existing debt but refinancing. Canadian Pacific refinanced heavily in 2020 and 2021 at very low rates. Those bonds will come due, and one matures at the end of 2026. Refinancing will likely cost much more because of higher inflation and the sell-off in Treasuries over recent months. The interest expense rose by double-digit percentages in the latest quarter, and it will stay elevated until the next refinancing, which Shawn hopes will come at lower rates.
“And if we look at debt, the bigger risk isn't the debt that they carry right now, but really whether or not they will need to refinance at some point in the near future. If they do, that will likely be at significantly higher rates”at 1:00:58
We Study Billionaires: TIP860: Canadian Pacific Kansas City Limited (CP.TO): Irreplaceable Moat, Unproven Compounding w/ Kyle Grieve & Shawn O'Malley ·
Kyle Grieve · The Investor's Podcast NetworkBearish
Shareholder value creation since the Kansas City Southern merger has been underwhelming.
Before the deal, Canadian Pacific had been doing well. Since 2023 its shares have compounded at about 4.5% a year, with a 1% dividend yield. That is modest for a railroad. Growth and attractive returns on capital have been harder to come by since the merger. Kyle thinks CEO Keith Creel has done a fine job integrating the deal, and he admits he lacks special insight into how hard integration is. The numbers still show weak results.
“...the value creation for shareholders since this deal has gone through just hasn't been amazing by any means. So since 2023 shares have compounded about four and a half percent with a 1% dividend yield.”at 1:03:40
We Study Billionaires: TIP860: Canadian Pacific Kansas City Limited (CP.TO): Irreplaceable Moat, Unproven Compounding w/ Kyle Grieve & Shawn O'Malley ·
Kyle Grieve · The Investor's Podcast NetworkBearish
Canadian Pacific Kansas City's insider ownership is thin and there is no meaningful insider buying, weakening management alignment.
Kyle could find no meaningful insider buying, so most management exposure comes through options. Shawn notes total insider ownership is only about 0.1%, and Creel's stake, including options, is worth about $27 million but is roughly 0.01% of shares. Compared with family-controlled HEICO, where the family's entire wealth is tied to the company, Canadian Pacific shows much weaker alignment. Kyle acknowledges that a 200-year-old company finds such alignment hard to achieve. He still gives management credit for good communication and transparency.
“And I wasn't able to find any meaningful insider buying as well. So most of their exposure to increased ownership is mainly through things like options.”at 1:07:35
We Study Billionaires: TIP860: Canadian Pacific Kansas City Limited (CP.TO): Irreplaceable Moat, Unproven Compounding w/ Kyle Grieve & Shawn O'Malley ·
Shawn O'Malley · The Investor's Podcast NetworkBearish
Canadian Pacific Kansas City's incentive pay has shifted away from ROIC, which is a yellow flag for shareholders.
CEO Keith Creel's pay is about 93% at risk and tied to operating ratio, operating income and safety. ROIC was dropped as a bonus measure and replaced with free cash flow and relative share price performance. Dropping ROIC makes sense because keeping it would require cutting targets, which sends the wrong message. Still, a change in compensation framework is a warning sign. The compensation committee chair's proxy comments suggest shareholders want ROIC back. Shawn grades the incentive structure a B and would give an A if ROIC returned. Creel's retention window closed this year, so succession planning matters.
“I think that this would get this incentive structure back to being an A whereas today I'd give it more of maybe a B grade. So I'm hoping to see that they get back to that at some point”at 1:08:12
We Study Billionaires: TIP860: Canadian Pacific Kansas City Limited (CP.TO): Irreplaceable Moat, Unproven Compounding w/ Kyle Grieve & Shawn O'Malley ·
Kyle Grieve · The Investor's Podcast NetworkBearish
A Union Pacific and Norfolk Southern merger would put a dent in Canadian Pacific Kansas City's growth story.
Union Pacific and Norfolk Southern would form a coast-to-coast US railroad. The regulatory decision is not expected until 2027. Canadian Pacific has asked regulators to reject it. The merger could put Canadian Pacific's transcontinental positioning at risk, one of its largest competitive advantages. Kyle does not think the merger would break the thesis, since Canadian Pacific would still have a large business, but it would probably dent the growth story.
“positioning, which I've discussed as being one of their largest competitive advantages would actually be at risk. So I don't think the merger would necessarily kill the thesis for the business by any means. Canadian Pacific Kansas City would still have a lot of business, but it probably would put a dent in the growth story.”at 1:09:51
We Study Billionaires: TIP860: Canadian Pacific Kansas City Limited (CP.TO): Irreplaceable Moat, Unproven Compounding w/ Kyle Grieve & Shawn O'Malley ·
Shawn O'Malley · The Investor's Podcast NetworkBearish
US refusal to extend USMCA and annual reviews give Washington leverage over Canadian Pacific Kansas City's fastest-growing trade-exposed business.
In July the US declined to extend the USMCA agreement at its first review, although Canada and Mexico wanted to. The agreement runs to 2036, but it is now reviewed annually, so the US has political leverage. If relations worsen, the US could use the agreement to extract concessions. That matters because Canadian Pacific's fastest-growing segments, automotive, energy and commodities, depend on cross-border trade. Higher tariffs or slower nearshoring would hurt volumes.
“But it will be reviewed on an annual basis and that does mean The US is going to have some political leverage over the deal... And I think that matters because Canadian Pacific Kansas City's fastest growing business segment is in things like automotive, energy, and commodities”at 1:10:32
We Study Billionaires: TIP860: Canadian Pacific Kansas City Limited (CP.TO): Irreplaceable Moat, Unproven Compounding w/ Kyle Grieve & Shawn O'Malley ·
Kyle Grieve · The Investor's Podcast NetworkUncertain
USMCA-compliant exemptions partly shield Canadian Pacific Kansas City from tariffs, though trade uncertainty remains significant.
Shawn's trade risk is real, but Kyle sees partial protection. US tariffs exempt USMCA-compliant goods, so many goods can move across the US without incurring the large tariffs. That also helps if freight moves directly between Mexico and Canada. Rising volumes show the company keeps shipping more products through the US. Kyle still says there is significant uncertainty in this area.
“So The U. S. Exempts The United States, Mexico, Canadian agreement compliant goods. So this makes it from my understanding possible to move a lot of these goods across The U. S. Incurring these massive tariffs.”at 1:11:11
We Study Billionaires: TIP860: Canadian Pacific Kansas City Limited (CP.TO): Irreplaceable Moat, Unproven Compounding w/ Kyle Grieve & Shawn O'Malley ·
Kyle Grieve · The Investor's Podcast NetworkBullish
Post-merger volume growth and truck-to-rail diversion are real growth levers, unlike a flat industry.
Many North American railroads have had flat volumes for about two decades, so CPKC's growth stands out. Since the merger, volumes excluding coal are up 22% measured by revenue track miles, which Kyle calls rare for the industry. A second lever is converting Mexico-US trucking freight to rail. Trucks carried about 74% of Mexico's transborder trade in 2025. CPKC targets diverting about 64,000 truckloads a year and is about 40% of the way there. Kyle notes the 2025 dip from the 2024 record may not be due to CPKC, but the rail option makes the switch easier. Because trucking is fragmented and rail competes with no other railroad on that lane, he prefers taking share from it.
“The merger helped Canadian Pacific Kansas City's volumes increase by a decent amount. So since the merger, if you exclude coal, their volumes are up 22% as seen by revenue track miles. That's pretty rare growth in the industry.”at 1:12:44
We Study Billionaires: TIP860: Canadian Pacific Kansas City Limited (CP.TO): Irreplaceable Moat, Unproven Compounding w/ Kyle Grieve & Shawn O'Malley ·
Shawn O'Malley · The Investor's Podcast NetworkBullish
CPKC can win truck freight share on structural rail advantages, not price cuts.
Taking share from a fragmented industry like trucking is easier than taking it from another consolidated railroad. No single trucker is large enough to fight back in a coordinated way. Taking share from a rival railroad would mean a price war against a competitor with the same cost structure and patience. Trucking is thousands of small operators that cannot match rail's fuel economics on long hauls. So CPKC can grow on structural advantage rather than by cutting price.
“Because when you take share from a fragmented industry, nobody on the other side is big enough to fight back in a coordinated way.”at 1:13:51
We Study Billionaires: TIP860: Canadian Pacific Kansas City Limited (CP.TO): Irreplaceable Moat, Unproven Compounding w/ Kyle Grieve & Shawn O'Malley ·
Shawn O'Malley · The Investor's Podcast NetworkBullish
Merger unlocked Mexico freight: automotive up 19% and newly economic Canada-to-Mexico grain.
The merger opened new opportunities. Automotive volumes grew 19% last quarter, which fits Mexico becoming a major car manufacturing hub. Grain moving from Canada into Mexico is a route that only became economical once the merger removed the constraints that had blocked it. Both are merger-enabled growth beyond the base business.
“automotive just grew 19% last quarter and that lines up with Mexico increasingly becoming a major car manufacturing hub.”at 1:14:18
We Study Billionaires: TIP860: Canadian Pacific Kansas City Limited (CP.TO): Irreplaceable Moat, Unproven Compounding w/ Kyle Grieve & Shawn O'Malley ·
Kyle Grieve · The Investor's Podcast NetworkBullish
Guided EPS growth above revenue growth gives an operating-leverage tailwind if efficiency keeps improving.
Management guides for EPS growth above revenue growth, which relies mostly on buybacks and operating leverage. Moving more volume with less incremental cost is a tailwind, provided efficiency metrics keep improving. Kyle stresses that the company has to improve efficiency consistently to keep those benefits coming. The view is therefore conditional on execution, not a fully confident call.
“And on top of the volume growth, there's also the potential to improve operating leverage since management has guided for higher earnings per share growth than revenue that mostly has to come from buybacks”at 1:15:06
We Study Billionaires: TIP860: Canadian Pacific Kansas City Limited (CP.TO): Irreplaceable Moat, Unproven Compounding w/ Kyle Grieve & Shawn O'Malley ·
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