• Canadian Pacific Kansas City Limited (NYSE:CP) is navigating through challenging times with downward revisions in earnings estimates and a decline in share price.
• Kansas City Capital maintains a "Buy" rating with a cautious outlook, while BofA raises the price target, indicating some level of confidence in CP's future performance.
• Increased operating expenses, high leverage, and limited cash reserves pose significant risks, making CP a less attractive investment option despite its resilience in the stock market.

Canadian Pacific Kansas City Limited (NYSE:CP) is a major player in the rail industry, providing freight transportation services across North America. Despite its significant role, the company is currently navigating through a challenging period. The rail industry itself is facing headwinds, and CP is not immune to these pressures. Competitors like Union Pacific and CSX are also experiencing similar industry-wide challenges.

On December 17, 2025, Kansas City Capital maintained a "Buy" rating for CP, with a "hold" action, indicating a cautious optimism. At that time, the stock was priced at $73.52. BofA also showed confidence by raising the price target from $82 to $84, as highlighted by TheFly. However, CP is grappling with several financial challenges that could impact its future performance.

CP's earnings estimates have been revised downward, with a 2.25% decrease for the first quarter of 2026 over the past 60 days. For 2025 and 2026, earnings estimates have been reduced by 2.92% and 3.78%, respectively. This reflects a lack of confidence from brokers, which is concerning for potential investors. The company's share price has also declined by 9.7% over the past year.

Operating expenses for CP have risen in 2025, mainly due to labor agreements, despite a reduction in fuel costs. This increase in expenses, coupled with high leverage and limited cash reserves, makes CP a less attractive investment option. The company's substantial debt is a significant concern, as it limits financial flexibility and increases risk.

Despite these challenges, CP's stock has shown some resilience. On the day of the announcement, the stock experienced a slight increase of 0.23%, or $0.17, fluctuating between $73.12 and $73.88. Over the past year, CP's stock has reached a high of $83.65 and a low of $66.49. With a market capitalization of approximately $68 billion and a trading volume of 1,374,232 shares, CP remains a significant player in the rail industry.