A month has gone by since the last earnings report for Canadian Pacific Railway Limited CP. Shares have lost about 6.4% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Second Quarter Earnings

Canadian Pacific earnings (on an adjusted basis) of $2.06 per share (C$2.77) beat the Zacks Consensus Estimate by a penny and also improved 29.6% from the year-ago figure.

Quarterly revenues increased 8.5% year over year to $1,221.1 million (C$1,643 million) but fell short of the Zacks Consensus Estimate of $1,235.9 million. Freight revenues, which improved 11% year over year on a foreign exchange adjusted basis, accounted for the bulk (97.3%) of the top line.

Freight segment consists of Grain (up 20%), Coal (up 11%), Potash (up 38%), Sulfur and Fertilizer (down 4%), Forest products (down 3%), Energy, Chemicals and Plastics (up 16%), Metals, Minerals and Consumer products (up 36%), Automotive (down 15%) and Intermodal (up 8%). Total freight revenues per revenue ton-miles (RTMs) decreased 1% on a foreign exchange adjusted basis in the reported quarter. Additionally, the foreign exchange adjusted increase in freight revenues per car load was 3%.

Operating income (on an adjusted basis) climbed 23.2% in the second quarter. Operating ratio (operating expenses as a percentage of revenues on an adjusted basis) came in at 58.7% compared with 62.0%, a year ago. 

Liquidity

The company exited the second quarter with cash and cash equivalents of C$238 million compared with C$164 million at the end of 2016. Long-term debt totaled C$7,660 million compared with C$8,659 million at the same time around.

How Have Estimates Been Moving Since Then?

Following the release, investors have witnessed an upward trend in fresh estimates. There has been one revision higher for the current quarter. While looking back an additional 30 days, we can see even more upward momentum.

Canadian Pacific Railway Limited Price and Consensus

Canadian Pacific Railway Limited Price and Consensus | Canadian Pacific Railway Limited Quote

VGM Scores

At this time, Canadian Pacific's stock has a subpar Growth Score of D, though it is lagging a bit on the momentum front with F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, stocks has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

The company's stock is suitable solely for value based on our styles scores.

Outlook

While estimates have been broadly trending upward for the stock, the magnitude of these revisions has been net zero. It comes with little surprise that the stock has a Zacks Rank #1 (Strong Buy). We are expecting an above average return from the stock in the next few months,

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