[CP] CPKC: Q3 2026 Earnings Test Grain Growth, Fuel Costs and Buybacks

Canadian Pacific Kansas City (CPKC) runs the only freight railway network that spans Canada, the United States and Mexico[1], and it is scheduled to hold its earnings call on 2026-10-28 for the third quarter 2026, the three months ended September 30, 2026[2]. In the latest reported quarter, the second quarter of 2026, total revenue rose 13% to C$4.164 billion and core adjusted diluted EPS rose 13% to C$1.27, but the core adjusted operating ratio worsened by 90 basis points to 61.6%[3]. Fuel surcharge revenue rose C$258 million in the quarter[4], volume measured in revenue ton-miles (RTMs) grew 4%[5], and reported diluted EPS fell 14% to C$1.15 because the prior-year quarter included a C$333 million gain on the sale of an equity investment[6]. In its second-quarter release the company said it was positioned for accelerated volume and earnings growth in the second half of 2026, without giving numbers[5]; it also plans to invest about C$2.65 billion in its 2026 capital programs[7] and expects a full-year core adjusted effective tax rate of about 24.75%[8]. Analyst forecasts compiled by Drillr as of October 14 put CPKC Q3 2026 earnings expectations at C$4.198 billion of total revenue (12 analysts, range C$4.072 billion to C$4.338 billion) and C$1.31 of EPS (16 analysts, range C$1.26 to C$1.37), a basis that roughly matches the company's core adjusted EPS[9].

Three things matter most in this report. The first is whether volume really accelerates: in the second quarter grain RTMs rose 19% while coal RTMs fell 29%, the two largely offset each other, and network RTMs grew only 3% in the first half[10]; the third quarter opens the new Canadian crop year, and whether grain can push network growth clearly above the first-half pace decides whether revenue growth can stop leaning on fuel surcharges. The second is whether the operating ratio returns to year-over-year improvement: the core adjusted operating ratio worsened by 50 basis points in the first quarter and 90 basis points in the second[11], and excluding fuel on both sides, second-quarter revenue and expenses each grew only about 6%[12], so the third quarter needs labour, stock compensation and casualty costs to grow more slowly than volume. The third is whether free cash covers shareholder returns: adjusted free cash was C$1.341 billion in the first half[13], while buybacks and dividends together reached C$2.371 billion[14], and adjusted net debt to adjusted EBITDA rose to 3.2 times at June 30[15]; third-quarter cash flow and quarter-end leverage will show whether this was a seasonal mismatch or a buyback that keeps relying on borrowing.

Company Background and Business Structure

CPKC is a Class I freight railroad that spans three countries, operating a network of about 20,000 miles and listed in Toronto and New York under the symbol CP[1]. Its core subsidiary, Canadian Pacific Railway Company, was incorporated in 1881; the company's registered head office is in Calgary and its U.S. head office is in Kansas City, Missouri[1]. CPKC took control of Kansas City Southern (KCS) on April 14, 2023, and has consolidated KCS as a subsidiary since then; before that date, its 100% interest in KCS was accounted for under the equity method[16]. Revenue and assets after 2023 therefore include KCS's U.S. and Mexican lines, which changes the basis of comparison with earlier years.

Almost all revenue comes from freight, which the company groups into bulk, merchandise and intermodal. Freight revenue was C$14.776 billion in 2025[17]. Bulk made up about 36% and includes grain, coal, potash, and fertilizers and sulphur, which mostly move in unit trains from one origin to one destination[18]. Merchandise made up about 46% and includes energy, chemicals and plastics, metals, minerals and consumer products, forest products and automotive; it moves in mixed and unit trains and reaches customers without rail sidings through truck-rail transload facilities[19]. Intermodal made up about 18% and carries international marine containers to and from ports as well as 53-foot domestic containers within North America[20].

A few large business lines define the character of the CPKC network. Grain is about 22% of freight revenue; the network sits in the heart of the grain-producing regions of western Canada and the U.S. northern plains, its 8,500-foot High Efficiency Product trains move about 40% more grain than the prior generation, and Canadian grain moves mainly west to the Port of Vancouver and east to the Port of Thunder Bay for export[21]. Coal is about 7%; in Canada it is mostly metallurgical coal from Elk Valley Resources' mines in southeastern British Columbia, moved west to port terminals for export[22]. Energy, chemicals and plastics is about 20%, and the company is a main carrier of refined fuels from the U.S. Gulf Coast into Mexico[23]; automotive is about 9%, and CPKC serves the majority of automotive plants in Mexico[24].

Revenue recognition, geographic mix and asset ownership each carry details worth noting. Customers order service under contracts or public tariffs, each bill of lading or service request is a distinct performance obligation, revenue is recognized over time as freight moves, and unfinished obligations are generally satisfied in the following reporting period[25]. Fuel surcharges are charged shipment by shipment based on public diesel prices and totalled C$1.483 billion in 2025, about 10% of freight revenue[26]. By geography, Canada contributed C$7.243 billion of 2025 total revenue of C$15.078 billion, the U.S. C$5.124 billion and Mexico C$2.711 billion, while the U.S. held C$26.860 billion of long-lived assets, the largest share of the three countries[27]. The Mexican lines run under a concession: the company has the right to operate them, but the land, roadway and associated structures belong to the Mexican government[28].

Financial History and Current Position

2025 was the year CPKC's margins clearly improved after the merger. Total revenue rose 4% to C$15.078 billion, mainly on higher volume; the reported operating ratio improved 160 basis points to 62.8% and the core adjusted operating ratio improved 140 basis points to 59.9%; diluted EPS rose 13% to C$4.51 and core adjusted diluted EPS rose 8% to C$4.61[29]. Operating expenses totalled C$9.469 billion, including C$2.581 billion of compensation and benefits, C$1.731 billion of fuel, C$2.019 billion of depreciation and amortization and C$2.256 billion of purchased services and other[30]. The core adjusted operating ratio excluded 0.4 percentage points of acquisition-related costs and 2.5 percentage points of KCS purchase accounting[31].

Cash flow in 2025 supported heavy shareholder returns, but with little to spare. Operating cash flow was C$5.309 billion and additions to properties were C$3.102 billion, up from C$2.825 billion in 2024; net income of C$4.137 billion included a C$333 million gain on the sale of an equity investment[32]. By October 29, 2025, the company had bought back all 37.3 million shares authorized under the prior repurchase program[33], spending C$3.942 billion on buybacks and C$796 million on dividends for the year[32]. Operating cash flow minus additions to properties came to about C$2.2 billion, well below the roughly C$4.7 billion of combined buybacks and dividends.

The first two quarters of 2026 moved in different directions. In the first quarter revenue fell 2% to C$3.701 billion, RTMs rose 2%, the core adjusted operating ratio worsened 50 basis points to 63.0%, and core adjusted diluted EPS fell 2% to C$1.04, including year-over-year headwinds of about 4 cents from foreign exchange and 3 cents from fuel prices[11]; the volume growth came from grain and intermodal, while coal and energy, chemicals and plastics declined[34]. In the second quarter revenue rose 13% to C$4.164 billion, operating income rose from C$1.343 billion to C$1.472 billion, and core adjusted diluted EPS rose 13% to C$1.27[35]. For the first half, revenue was C$7.865 billion, up 5%, and the core adjusted operating ratio was 62.3%, 70 basis points worse than 61.6% a year earlier[35].

CPKC borrowed more in the first half of 2026. First-half operating cash flow was C$2.702 billion and additions to properties were C$1.422 billion, slightly below C$1.454 billion a year earlier, while buybacks were C$1.963 billion and dividends C$408 million[14]; adjusted free cash was C$1.341 billion, up from C$1.071 billion, including C$1.003 billion in the second quarter[13] and C$338 million in the first[36]. During the half the company repaid two maturing US$250 million notes and issued US$600 million of 3-year notes at 4.00% and US$600 million of 30-year notes at 5.50%; it held C$366 million of cash at June 30 and its revolving credit facility was undrawn[37]. At June 30 adjusted net debt was C$25.787 billion and trailing 12-month adjusted EBITDA was C$7.942 billion, a ratio of 3.2 times compared with 3.0 times a year earlier[15].

Operating Model

CPKC's freight revenue equals the sum of each business line's RTMs multiplied by its freight revenue per RTM. In the second quarter the network moved 57,577 million RTMs[10] and earned C$4.088 billion of freight revenue, or about 7.10 cents per RTM[6]. RTMs follow customers' actual shipping needs: grain depends on harvests and exports, coal on metallurgical coal output and port operations, energy and chemicals on crude and refined fuel flows, automotive on vehicle production in the three countries, and intermodal on port container traffic and North American retail restocking. Freight revenue per RTM reflects contract rates, fuel surcharges and volume rebates, and it shifts with length of haul and business mix; the second-quarter increase came mainly from C$257 million of higher fuel surcharge revenue driven by fuel prices, higher freight rates and a C$21 million foreign exchange effect[38].

Operating income equals revenue minus labour, fuel, materials, equipment rents, depreciation and purchased services, and volume and fuel push the operating ratio in different directions. Railroads carry high fixed costs, and under Precision Scheduled Railroading the company runs heavier trains with shorter terminal dwell, so incremental volume has a low marginal cost and volume growth usually improves the operating ratio; in the second quarter gross ton-miles (GTMs) rose 6%, average terminal dwell fell from 10.2 hours to 8.6 hours, and average train speed rose 7%[39]. Fuel surcharges, by contrast, pass costs through, so revenue and expenses rise together with little change in profit, which mechanically lifts the operating ratio, and the timing of surcharge recoveries lags fuel price moves[4]. The core adjusted operating ratio excludes acquisition-related costs, rail consolidation advisory costs and KCS purchase accounting, which together accounted for 3.0 percentage points in the second quarter, including 2.1 points of KCS purchase accounting[40].

Cash flow transmission is more direct, but capital spending and shareholder returns absorb most of the cash. Freight is billed by bill of lading and usually collected in the next reporting period, so working capital needs are small, and operating cash flow roughly equals net income plus depreciation and amortization (C$519 million in the second quarter), plus or minus working capital changes[14]. The company plans to invest about C$2.65 billion in 2026, with 55% to 60% going to track and roadway[7]; the remaining adjusted free cash funds dividends and buybacks, and commercial paper and long-term notes cover any shortfall. Exchange rates touch revenue, expenses and interest at the same time: every one-cent weakening of the Canadian dollar against the U.S. dollar adds about C$78 million to annualized revenue, about C$45 million to operating expenses and about C$6 million to net interest expense[41].

The lags in this model show up in three places. Grain volume concentrates in the second half with the harvest, fuel surcharge recoveries trail fuel price changes, and capital spending is spread across quarters under the annual plan. The company does not split contract rates and fuel surcharges by business line, so changes in freight revenue per RTM cannot be fully separated into rate, fuel and mix; synergies from the KCS combination are not disclosed quarterly either, so they cannot be checked directly against the financial statements.

Industry and Competitive Position

CPKC's competitive advantage comes mainly from the shape of its network rather than its size. North America has six Class I freight railroads; the other five are Canadian National, Union Pacific, BNSF, CSX and Norfolk Southern, and CPKC is the only one whose single network spans three countries[1]. The company holds clear positions in the Canadian Prairie grain belt[21], at Mexican automotive plants[24] and in refined fuel moves from the U.S. Gulf Coast into Mexico[23]. Even so, second-quarter volumes of fuel oil from the southern U.S. to Mexico and within Mexico fell, which shows that this network advantage does not guarantee growth in every flow[42].

Competitive pressure comes from several modes of transport. The annual report says the company competes with other railways, motor carriers, ship and barge operators and pipelines, mainly on service quality, freight rates and market access, and that competition with trucking turns mainly on rates, flexibility of service and transit time[43]. Railways must build and maintain their networks with their own resources, while other modes generally use public rights-of-way built and maintained by governments, which is a cost-structure disadvantage for rail[43].

Industry consolidation is the largest structural variable right now. Union Pacific's proposed acquisition of Norfolk Southern is under review by the U.S. Surface Transportation Board (STB), and CPKC spent C$14 million on advisory costs for related analysis and advocacy in the second quarter[44]; these costs are excluded from the core adjusted operating ratio and accounted for 0.3 percentage points in the quarter[40]. The available disclosures show only that CPKC is actively engaged in the review; they do not quantify how an approved merger would affect its cross-border flows and pricing.

Core Debates

CPKC says volume growth will accelerate in the second half. The third quarter opens the new Canadian crop year and the company has already announced record grain shipments, but metallurgical coal volumes fell about 20% in the first half. Can grain growth outweigh the coal decline and lift network volume growth clearly above the first half's 3%?

This question matters because grain and coal together make up about 29% of freight revenue and travel long distances, making them the two biggest swing factors for network RTMs[21][22]. In the second quarter grain added 2,844 million RTMs while coal lost 1,735 million, the two largely offset each other, and network RTMs rose only 4%, after 3% for the first half[10]. Whether network volume accelerates decides whether second-half revenue growth can stop leaning on fuel surcharges.

Grain momentum is strong. Second-quarter grain RTMs reached 17,814 million, up 19%, and grain carloads reached 168,000, up 18%[10]; grain freight revenue was C$925 million, up 24%, and C$1.796 billion for the first half, up 17%[45]. The growth came from Canadian grain to Vancouver, Mexico, eastern Canada and the U.S. Midwest and from U.S. grain to Mexico and the U.S. Pacific Northwest, and grain revenue per RTM also rose with higher fuel surcharges and freight rates[46]. After the quarter ended, the company issued a press release saying September and third-quarter grain carloads and tonnage set records, but the release gave no year-over-year growth rates and is not an SEC filing.

Coal, by contrast, is clearly in decline. Second-quarter coal RTMs were only 4,338 million, down 29%, and first-half coal RTMs fell 20%[10]; coal freight revenue was C$209 million, down 18%[45]. The company attributed the decline mainly to lower volumes of Canadian coal to Vancouver, Kamloops and Thunder Bay because of lower production and maintenance at both the mines and the ports; because Canadian coal has a longer haul, RTMs fell more than carloads[47].

The two explanations lead to very different financial outcomes. The more optimistic reading is that new-crop grain growth, plus new grain flows to Mexico and the southern U.S., will make trains heavier and volumes larger at a low marginal cost, lifting both freight revenue and operating leverage. The other reading is that the record mainly reflects a large Canadian harvest and export grain moving to ports, where revenue from western Canadian export grain is capped by a government maximum revenue entitlement, so yield and haul length are limited, while coal stays at a low and network RTM growth merely matches the first half[21]. Third-quarter grain RTMs, grain revenue per RTM and coal RTMs can distinguish between the two.

Specifically, four thresholds are worth watching in the third quarter: whether grain RTMs grow at least 15% year over year, whether grain revenue per RTM rises year over year, whether the coal RTM decline narrows to within 10%, and whether network RTMs grow at least 5%. Conversely, if grain RTM growth is below 8%, the quarterly record is only a narrow one and is not enough to lift the network; if coal RTMs still fall by more than 20%, the second quarter was not the bottom. The third-quarter 2025 comparison figures will be published with this report, so every year-over-year test above depends on that disclosure.

CPKC's second-quarter revenue rose 13%, yet its operating ratio, the measure of cost efficiency, worsened by 0.9 percentage points. Is that mostly arithmetic dilution from passing higher fuel costs through to shippers, or are labour, stock compensation and casualty costs rising? Can the operating ratio improve year over year again in the third quarter?

The operating ratio is the core measure of railroad profitability. CPKC's core adjusted operating ratio fell to 59.9% in 2025[29], but it worsened year over year in both of the first two quarters of 2026, reaching 61.6% in the second quarter, up 90 basis points[3]. If fuel surcharges make revenue growth look fast while margins keep slipping, the market will treat revenue growth mostly as a shadow of oil prices; the third-quarter EPS consensus of about C$1.31 is above the second quarter's C$1.27[9], which requires help on the cost side.

Fuel is the first reason the operating ratio worsened in the second quarter. The average fuel price rose 51% year over year to US$4.19 per gallon[39], fuel surcharge revenue rose C$258 million, or 74%, to C$608 million[4], and fuel expense rose C$213 million, or 53%[12]. By the company's measure, fuel prices added C$257 million to total revenue and C$200 million to operating expenses, a net benefit of C$57 million to operating income, and a net benefit of C$38 million for the first half[48]. Excluding fuel on both sides, second-quarter revenue and expenses each grew about 6%, so fuel did not erode profit; it mechanically pushed the operating ratio up.

Non-fuel costs are rising as well. Second-quarter compensation and benefits were C$723 million, up 10%, or 8% excluding foreign exchange[12], including C$35 million of higher stock-based compensation from changes in payout rates, plus wage and benefit inflation and volume-variable costs from higher workload[49]; purchased services and other rose 6%, partly because of higher casualty incident costs and C$14 million of advisory costs tied to the merger review[44]. Efficiency measures are improving: average headcount was 19,835 in the second quarter, down 2%, while gross ton-miles rose 6%[39].

The key disagreement is whether these costs are one-off. One reading is that pressure from casualty, stock compensation and incentive pay is temporary and the fuel surcharge lag will reverse, so the operating ratio can improve year over year again in the third quarter. The other reading is that stock compensation and casualty costs are not one-off; the collective agreement of the union representing Canadian signals and communications workers was still open for renewal when the annual report was filed[50], their strike, which began on May 31 and ended in late August, may add costs in the third quarter, and the company's filings have not yet disclosed its impact. The third-quarter net fuel effect and the growth of compensation and benefits relative to GTMs can distinguish between the two.

Specifically, four signals are worth watching in the third quarter: whether the core adjusted operating ratio improves by at least 50 basis points year over year or falls below 60%, whether the net fuel effect on operating income stays positive, whether compensation and benefits growth excluding foreign exchange stays at or below GTM growth, and what casualty and strike-related costs appear in purchased services. If the core adjusted operating ratio rises by another 50 basis points or more, the cost problem is not just a fuel lag; if the net fuel effect turns negative, the surcharge lag has started to erode profit.

In the first half of this year CPKC spent about C$1 billion more on buybacks and dividends than it generated in adjusted free cash, borrowing the difference and lifting leverage to 3.2 times. Can third-quarter free cash cover buybacks and dividends, and can leverage begin to come down?

Buybacks are an important source of CPKC's EPS growth. Diluted share count fell about 4% year over year in the second quarter[6], and core adjusted EPS rose 13%, faster than the roughly 10% increase in operating income[35]. If buybacks keep relying on borrowing, higher interest expense will offset part of the per-share gain; second-quarter net interest expense already rose 14% to C$237 million[6], and leverage will also limit room for further buybacks.

Second-quarter cash flow itself was not weak. Operating cash flow was C$1.726 billion, up C$371 million year over year[51], of which C$120 million came from working capital changes[14]; adjusted free cash was C$1.003 billion, compared with C$605 million a year earlier[13]. In the same quarter, however, buybacks of C$1.283 billion and dividends of C$204 million totalled C$1.487 billion, about C$480 million more than free cash, and commercial paper rose by a net C$778 million[14]. For the first half, buybacks and dividends of C$2.371 billion exceeded adjusted free cash of C$1.341 billion by about C$1 billion[13].

The debt side needs to be read as a whole. Adjusted net debt was C$25.787 billion at June 30, up about C$3.3 billion from C$22.485 billion a year earlier, and adjusted net debt to adjusted EBITDA rose from 3.0 times to 3.2 times[15]; on the same date Moody's rated the company's long-term debt Baa1 with a stable outlook[52]. The 2026 repurchase program allows up to 44.9 million shares through February 1, 2027[53]. On September 29 the company announced that its subsidiary would issue C$1.8 billion of notes in four tranches with coupons from 4.20% to 5.40% and maturities from 2030 to 2056, with proceeds mainly for refinancing[54].

The other reading holds that the first-half gap was only a seasonal mismatch. The second half is peak grain season, and C$1.422 billion of the roughly C$2.65 billion annual capital plan[7] had already been spent in the first half[14], so planned second-half capital spending is lower than the first half, free cash should rise seasonally, and leverage could ease on its own. The comparison of third-quarter free cash with buybacks, together with leverage at September 30, can distinguish between the two.

Specifically, four thresholds are worth watching in the third quarter: whether adjusted free cash is at least equal to buybacks plus dividends, whether buyback spending slows, whether adjusted net debt to adjusted EBITDA at September 30 is no higher than 3.1 times, and whether cumulative capital spending for the first nine months falls between C$1.9 billion and C$2.05 billion. If free cash covers less than two-thirds of buybacks and dividends, buybacks are still mainly debt-funded; if leverage rises above 3.3 times, credit metrics may start to constrain the buyback pace.

Risks and Falsifiers

The first risk comes from U.S. rail consolidation. If the STB approves Union Pacific's acquisition of Norfolk Southern, the U.S. rail map would become more concentrated and CPKC's competitive options and routing partnerships on cross-border and Mexican lanes could be affected; the company had already spent about C$27 million on advisory costs for the review in the first half[44]. The exposure is cross-border volume and pricing, plus advisory costs in purchased services and other; an STB rejection of the merger, or conditions that protect competitive access, would falsify this concern.

The second risk comes from trade rules. The annual report warns that the scheduled 2026 joint review of the United States-Mexico-Canada Agreement, and any resulting changes or non-renewal, could disrupt North American supply chains and hurt cross-border customer demand and pricing[55]. The largest exposures are automotive (about 9% of 2025 freight revenue)[24], cross-border intermodal and grain moving to Mexico, and the Mexican business generated C$2.711 billion of revenue in 2025[27]. If the agreement is renewed and tariffs on the main commodities stay unchanged, this risk fades.

The third risk is a prolonged coal trough. If reduced metallurgical coal output and port maintenance continue into the second half, long-haul coal RTMs will keep falling and offset grain gains, leaving network volume growth stuck at 3% to 4%. At the second quarter's coal yield of about 4.82 cents per RTM, every 1 billion fewer coal RTMs means roughly C$48 million less quarterly revenue[45]. If the year-over-year decline in third-quarter coal RTMs narrows to within 10%, this risk is falsified.

The fourth risk is non-fuel costs continuing to outpace revenue. If stock compensation, casualty claims and strike-related costs persist in the third quarter, expenses excluding fuel will grow faster than revenue and the operating ratio will worsen year over year for a third straight quarter; on second-quarter revenue of C$4.164 billion, every 50-basis-point increase in the operating ratio cuts quarterly operating income by about C$21 million[3]. If the third-quarter core adjusted operating ratio improves by at least 50 basis points year over year, this view is falsified.

The fifth risk is buybacks continuing to outrun free cash. If debt and interest expense keep rising and leverage climbs, further buybacks will be constrained and the per-share boost will weaken; the exposed lines are C$25.787 billion of adjusted net debt at June 30[15], C$237 million of second-quarter net interest expense and the diluted share count[6]. If third-quarter adjusted free cash at least equals buybacks plus dividends and leverage at September 30 is no higher than 3.1 times, this risk is falsified.

What to Watch Next

• Grain versus coal: grain RTMs were 17,814 million in the second quarter, up 19%[10]; growth of at least 15% in the new crop year's first quarter would confirm the acceleration case, and growth below 8% would falsify it.
• Grain versus coal: coal RTMs were 4,338 million, down 29%[10]; a decline narrowed to within 10% would confirm a bottom, and a decline still above 20% would falsify it.
• Grain versus coal: network RTMs rose 4% in the second quarter and 3% in the first half[10]; growth of at least 5% would confirm a clear acceleration.
• Fuel and the operating ratio: the core adjusted operating ratio was 61.6%, up 90 basis points[3]; an improvement of at least 50 basis points or a level below 60% would confirm, and another rise of 50 basis points or more would falsify.
• Fuel and the operating ratio: the net fuel effect on operating income was a C$57 million benefit[48]; a turn negative would show the surcharge lag eroding profit.
• Fuel and the operating ratio: compensation and benefits rose 10% (8% excluding foreign exchange) against 6% GTM growth[12][39]; compensation growth at or below GTM growth would confirm.
• Buybacks and leverage: second-quarter adjusted free cash was C$1.003 billion against C$1.487 billion of buybacks and dividends[13][14]; full coverage would confirm, and coverage below two-thirds would falsify.
• Buybacks and leverage: adjusted net debt to adjusted EBITDA was 3.2 times at June 30[15]; 3.1 times or lower at September 30 would confirm, and above 3.3 times would falsify.
• Buybacks and leverage: first-half capital spending was C$1.422 billion[14]; a nine-month total between C$1.9 billion and C$2.05 billion would be in line with the annual plan.

Conclusion

CPKC's results depend on whether volume and pricing across its three-country network turn into profit and cash. In 2025 the core adjusted operating ratio fell to 59.9%[29] and operating cash flow reached C$5.309 billion[32]; by the second quarter of 2026, however, 13% revenue growth rested mainly on fuel surcharges and grain while the core adjusted operating ratio rose 90 basis points to 61.6%[3], and first-half buybacks and dividends exceeded adjusted free cash by about C$1 billion as leverage rose to 3.2 times[15]. The central unresolved relationship is whether grain growth delivers real volume acceleration and operating leverage, so that margins and free cash keep pace with shareholder returns.

The outside coverage available since the second-quarter release consists mainly of recaps of the results and the call, company press releases on grain records and labour matters, reporting on the Union Pacific and Norfolk Southern merger review, and pages that aggregate brokerage views; none of it is a signed, verifiable outside assessment with independent reasoning on the three debates above. Outside views therefore offer no reference point on these debates for now, and all three must be tested by the numbers in the company's next report.

The combination that would materially strengthen the current understanding is third-quarter grain RTM growth above 15%, a coal decline narrowed to within 10% and network RTM growth above 5%, together with at least 50 basis points of year-over-year improvement in the core adjusted operating ratio, adjusted free cash that covers buybacks and dividends, and leverage of 3.1 times or lower at September 30. Conversely, if grain growth is below 8%, coal still falls more than 20%, the operating ratio rises another 50 basis points or more, buybacks still rely mainly on borrowing and leverage climbs above 3.3 times, then second-quarter revenue growth came more from oil prices and a single commodity than from the start of a network-wide volume acceleration.

Sources

[1] CP 10-K filed 2026-02-26 · company overview · 2026-02-26 · 10-K · https://www.sec.gov/Archives/edgar/data/16875/000001687526000008/

[2] Drillr earnings calendar (updated 2026-10-14) · CP 2026-10-28 call · 2026-10-14 · Drillr earnings calendar

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[4] CP 10-Q filed 2026-07-30 · fuel cost adjustment program Q2 · 2026-07-30 · 10-Q · https://www.sec.gov/Archives/edgar/data/16875/000001687526000026/

[5] CP 8-K filed 2026-07-29 · Q2 2026 release · 2026-07-29 · 8-K · https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000016875&type=8-K&dateb=20260729&owner=include&count=10

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[7] CP 10-K filed 2026-02-26 · capital programs 2026 plan · 2026-02-26 · 10-K · https://www.sec.gov/Archives/edgar/data/16875/000001687526000008/

[8] CP 10-Q filed 2026-07-30 · core adjusted effective tax rate outlook · 2026-07-30 · 10-Q · https://www.sec.gov/Archives/edgar/data/16875/000001687526000026/

[9] Drillr analyst_financial_estimates (updated 2026-10-14) · CP quarter ending 2026-09-30 · 2026-10-14 · Drillr analyst_financial_estimates · https://gateway.drillr.ai/mcp/private

[10] CP 8-K filed 2026-07-29 · Q2 2026 RTMs and carloads by line of business · 2026-07-29 · 8-K · https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000016875&type=8-K&dateb=20260729&owner=include&count=10

[11] CP 8-K filed 2026-04-29 · Q1 2026 release · 2026-04-29 · 8-K · https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000016875&type=8-K&dateb=20260429&owner=include&count=10

[12] CP 8-K filed 2026-07-29 · Q2 2026 operating expenses · 2026-07-29 · 8-K · https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000016875&type=8-K&dateb=20260729&owner=include&count=10

[13] CP 8-K filed 2026-07-29 · Q2 2026 adjusted free cash · 2026-07-29 · 8-K · https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000016875&type=8-K&dateb=20260729&owner=include&count=10

[14] CP 10-Q filed 2026-07-30 · Q2 2026 cash flow statement · 2026-07-30 · 10-Q · https://www.sec.gov/Archives/edgar/data/16875/000001687526000026/

[15] CP 8-K filed 2026-07-29 · adjusted net debt to adjusted EBITDA · 2026-07-29 · 8-K · https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000016875&type=8-K&dateb=20260729&owner=include&count=10

[16] CP 10-K filed 2026-02-26 · KCS control date · 2026-02-26 · 10-K · https://www.sec.gov/Archives/edgar/data/16875/000001687526000008/

[17] CP 10-K filed 2026-02-26 · lines of business · 2026-02-26 · 10-K · https://www.sec.gov/Archives/edgar/data/16875/000001687526000008/

[18] CP 10-K filed 2026-02-26 · bulk · 2026-02-26 · 10-K · https://www.sec.gov/Archives/edgar/data/16875/000001687526000008/

[19] CP 10-K filed 2026-02-26 · merchandise · 2026-02-26 · 10-K · https://www.sec.gov/Archives/edgar/data/16875/000001687526000008/

[20] CP 10-K filed 2026-02-26 · intermodal · 2026-02-26 · 10-K · https://www.sec.gov/Archives/edgar/data/16875/000001687526000008/

[21] CP 10-K filed 2026-02-26 · grain · 2026-02-26 · 10-K · https://www.sec.gov/Archives/edgar/data/16875/000001687526000008/

[22] CP 10-K filed 2026-02-26 · coal · 2026-02-26 · 10-K · https://www.sec.gov/Archives/edgar/data/16875/000001687526000008/

[23] CP 10-K filed 2026-02-26 · energy chemicals and plastics · 2026-02-26 · 10-K · https://www.sec.gov/Archives/edgar/data/16875/000001687526000008/

[24] CP 10-K filed 2026-02-26 · automotive · 2026-02-26 · 10-K · https://www.sec.gov/Archives/edgar/data/16875/000001687526000008/

[25] CP 10-K filed 2026-02-26 · freight revenue recognition · 2026-02-26 · 10-K · https://www.sec.gov/Archives/edgar/data/16875/000001687526000008/

[26] CP 10-K filed 2026-02-26 · fuel cost adjustment program · 2026-02-26 · 10-K · https://www.sec.gov/Archives/edgar/data/16875/000001687526000008/

[27] CP 10-K filed 2026-02-26 · geographic revenue · 2026-02-26 · 10-K · https://www.sec.gov/Archives/edgar/data/16875/000001687526000008/

[28] CP 10-K filed 2026-02-26 · Mexico concession · 2026-02-26 · 10-K · https://www.sec.gov/Archives/edgar/data/16875/000001687526000008/

[29] CP 10-K filed 2026-02-26 · 2025 results · 2026-02-26 · 10-K · https://www.sec.gov/Archives/edgar/data/16875/000001687526000008/

[30] CP 10-K filed 2026-02-26 · FY2025 operating expenses · 2026-02-26 · 10-K · https://www.sec.gov/Archives/edgar/data/16875/000001687526000008/

[31] CP 10-K filed 2026-02-26 · FY2025 core adjusted operating ratio · 2026-02-26 · 10-K · https://www.sec.gov/Archives/edgar/data/16875/000001687526000008/

[32] CP 10-K filed 2026-02-26 · FY2025 cash flow statement · 2026-02-26 · 10-K · https://www.sec.gov/Archives/edgar/data/16875/000001687526000008/

[33] CP 10-K filed 2026-02-26 · FY2025 share repurchases · 2026-02-26 · 10-K · https://www.sec.gov/Archives/edgar/data/16875/000001687526000008/

[34] CP 10-Q filed 2026-04-30 · Q1 2026 RTM drivers · 2026-04-30 · 10-Q · https://www.sec.gov/Archives/edgar/data/16875/000001687526000015/

[35] CP 10-Q filed 2026-07-30 · financial highlights · 2026-07-30 · 10-Q · https://www.sec.gov/Archives/edgar/data/16875/000001687526000026/

[36] CP 8-K filed 2026-04-29 · Q1 2026 adjusted free cash · 2026-04-29 · 8-K · https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000016875&type=8-K&dateb=20260429&owner=include&count=10

[37] CP 10-Q filed 2026-07-30 · liquidity and debt · 2026-07-30 · 10-Q · https://www.sec.gov/Archives/edgar/data/16875/000001687526000026/

[38] CP 10-Q filed 2026-07-30 · freight revenue per RTM drivers · 2026-07-30 · 10-Q · https://www.sec.gov/Archives/edgar/data/16875/000001687526000026/

[39] CP 8-K filed 2026-07-29 · Q2 2026 operations performance · 2026-07-29 · 8-K · https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000016875&type=8-K&dateb=20260729&owner=include&count=10

[40] CP 10-Q filed 2026-07-30 · Q2 2026 core adjusted operating ratio reconciliation · 2026-07-30 · 10-Q · https://www.sec.gov/Archives/edgar/data/16875/000001687526000026/

[41] CP 10-K filed 2026-02-26 · FY2025 FX sensitivity · 2026-02-26 · 10-K · https://www.sec.gov/Archives/edgar/data/16875/000001687526000008/

[42] CP 10-Q filed 2026-07-30 · Q2 2026 energy chemicals and plastics · 2026-07-30 · 10-Q · https://www.sec.gov/Archives/edgar/data/16875/000001687526000026/

[43] CP 10-K filed 2026-02-26 · competition · 2026-02-26 · 10-K · https://www.sec.gov/Archives/edgar/data/16875/000001687526000008/

[44] CP 10-Q filed 2026-07-30 · Q2 2026 purchased services · 2026-07-30 · 10-Q · https://www.sec.gov/Archives/edgar/data/16875/000001687526000026/

[45] CP 8-K filed 2026-07-29 · Q2 2026 freight revenue and yield by line of business · 2026-07-29 · 8-K · https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000016875&type=8-K&dateb=20260729&owner=include&count=10

[46] CP 10-Q filed 2026-07-30 · Q2 2026 grain · 2026-07-30 · 10-Q · https://www.sec.gov/Archives/edgar/data/16875/000001687526000026/

[47] CP 10-Q filed 2026-07-30 · Q2 2026 coal · 2026-07-30 · 10-Q · https://www.sec.gov/Archives/edgar/data/16875/000001687526000026/

[48] CP 10-Q filed 2026-07-30 · impact of fuel price on earnings · 2026-07-30 · 10-Q · https://www.sec.gov/Archives/edgar/data/16875/000001687526000026/

[49] CP 10-Q filed 2026-07-30 · Q2 2026 compensation and fuel expense · 2026-07-30 · 10-Q · https://www.sec.gov/Archives/edgar/data/16875/000001687526000026/

[50] CP 10-K filed 2026-02-26 · Canadian bargaining units · 2026-02-26 · 10-K · https://www.sec.gov/Archives/edgar/data/16875/000001687526000008/

[51] CP 10-Q filed 2026-07-30 · Q2 2026 cash flow discussion · 2026-07-30 · 10-Q · https://www.sec.gov/Archives/edgar/data/16875/000001687526000026/

[52] CP 10-Q filed 2026-07-30 · credit ratings · 2026-07-30 · 10-Q · https://www.sec.gov/Archives/edgar/data/16875/000001687526000026/

[53] CP 10-Q filed 2026-07-30 · NCIB 2026 · 2026-07-30 · 10-Q · https://www.sec.gov/Archives/edgar/data/16875/000001687526000026/

[54] CP 8-K filed 2026-09-29 · C$1.8 billion notes offering · 2026-09-29 · 8-K · https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000016875&type=8-K&dateb=20260929&owner=include&count=10

[55] CP 10-K filed 2026-02-26 · trade policy risk · 2026-02-26 · 10-K · https://www.sec.gov/Archives/edgar/data/16875/000001687526000008/