Canadian Pacific Kansas City Ltd.

IndustrialsRailroadsNYSE

$86.04

Market Cap: $76.38B

Canadian Pacific Kansas City Ltd. (CP) Valuation Summary

Updated May 9, 2026 07:11

Model	Range	Fair Value	Upside
▸ Discounted Cash Flow
Growth Exit 5Y	$63.03 – $395.75	$115.27	+34.0%
Growth Exit 10Y	$90.23 – $524.15	$158.89	+84.7%
EBITDA Exit 5Y	$87.78 – $184.24	$132.05	+53.5%
EBITDA Exit 10Y	$114.70 – $258.24	$176.06	+104.6%
▸ Trading Multiples
P/E	$81.70 – $98.31	$91.76	+6.7%
EV/EBITDA	$62.28 – $99.97	$80.42	-6.5%
EV/Revenue	$27.48 – $49.14	$38.24	-55.5%
▸ PEG
PEG Fair Value	$26.70 – $26.70	$26.70	-69.0%
▸ Earnings Power Value
Earnings Power Value	$28.21 – $50.25	$37.13	-56.8%
▸ Dividend Discount
Dividend Discount	$8.32 – $21.26	$12.35	-85.6%

Valuation History

DCF Analysis

Fair Value

$115.27

Market Price

$86.04

Upside / Downside

+34.0%

Verdict

Undervalued

Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Canadian Pacific Kansas City Ltd.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 14.8% to 5.4% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 47, DPO 62, DIO 25). At a 7.9% WACC with mid-year discounting, the terminal value (83% of enterprise value) is derived from the Gordon Growth Model on Year 6 FCFF at a 3.5% perpetual rate. After subtracting net debt, the equity value implies a fair price of $115.27 per share, suggesting CP is undervalued by 34.0% at the current price of $86.04.

FCFF Present Value Calculation

WACC

7.87%

3% – 20%

Terminal Growth

3.50%

0% – 6%

Forecast Period

5 Yrs

+ Terminal Year

Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.

Currency: USD Millions

	2026	2027	2028	2029	2030	Terminal
Profit Before Tax	5,367	6,036	6,645	7,158	7,542	7,806
(−) Net Interest	778	875	963	1,038	1,093	1,131
(+) D&A	1,715	1,987	2,317	2,564	2,805	2,903
EBITDA	7,860	8,897	9,925	10,760	11,441	11,841

(−) Tax	1,115	1,253	1,380	1,487	1,566	1,621
(−) CapEx	2,492	2,802	3,085	3,323	3,502	3,624
(−) ΔWC	1,202	129	118	99	74	77
Free Cash Flow (FCFF)	3,052	4,712	5,342	5,851	6,298	6,519

Terminal Value						149,247
WACC / Discount Rate	7.9%
Long-term Growth Rate	3.5%

Timing of FCF (mid year)	0.5	1.5	2.5	3.5	4.5	5
Present Value of FCF	2,939	4,206	4,421	4,488	4,479	102,199

Enterprise Value	122,733
Projection Period	20,534	16.7%
Terminal Value	102,199	83.3%

(−) Current Net Debt	17,023

Equity Value	105,710
(/) Outstanding Shares	917

Fair Price	$115.27

Sensitivity Analysis

WACC \ Terminal Growth Rate	2.5%	3.0%	3.5%	4.0%	4.5%
5.9%	$164	$191	$231	$291	$396
6.9%	$121	$136	$156	$182	$220
7.9%	$95	$104	$115	$130	$148
8.9%	$76	$82	$90	$99	$110
9.9%	$63	$67	$72	$78	$85

Current price: $86.04. Green = undervalued, Red = overvalued.

Fair Value

$158.89

Market Price

$86.04

Upside / Downside

+84.7%

Verdict

Undervalued

Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Canadian Pacific Kansas City Ltd.'s cash flows over 10 years with analyst estimates for the first 3–5 years, fading toward long-term GDP growth for the remaining years with line-by-line expense modeling. Revenue is projected revenue growing from 15.9% to 4.3% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 47, DPO 62, DIO 25). At a 7.9% WACC with mid-year discounting, the terminal value (71% of enterprise value) is derived from the Gordon Growth Model on Year 11 FCFF at a 3.5% perpetual rate. After subtracting net debt, the equity value implies a fair price of $158.89 per share, suggesting CP is undervalued by 84.7% at the current price of $86.04.

FCFF Present Value Calculation

WACC

7.87%

3% – 20%

Terminal Growth

3.50%

0% – 6%

Forecast Period

5 Yrs

+ Terminal Year

Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.

Currency: USD Millions

	2026	2027	2028	2029	2030	2031	2032	2033	2034	2035	Terminal
Profit Before Tax	5,417	6,208	7,035	7,882	8,728	9,553	10,332	11,042	11,658	12,158	12,583
(−) Net Interest	785	900	1,020	1,142	1,265	1,385	1,498	1,600	1,690	1,762	1,824
(+) D&A	1,715	1,992	2,338	2,621	2,929	3,275	3,659	4,042	4,414	4,764	4,931
EBITDA	7,918	9,100	10,393	11,645	12,922	14,212	15,488	16,684	17,761	18,684	19,338

(−) Tax	1,125	1,289	1,461	1,637	1,813	1,984	2,146	2,293	2,421	2,525	2,613
(−) CapEx	2,515	2,882	3,266	3,659	4,052	4,435	4,797	5,126	5,412	5,644	5,842
(−) ΔWC	1,211	153	160	164	164	160	151	137	119	97	100
Free Cash Flow (FCFF)	3,066	4,775	5,505	6,185	6,894	7,634	8,395	9,127	9,809	10,418	10,783

Terminal Value											246,878
WACC / Discount Rate	7.9%
Long-term Growth Rate	3.5%

Timing of FCF (mid year)	0.5	1.5	2.5	3.5	4.5	5.5	6.5	7.5	8.5	9.5	5
Present Value of FCF	2,953	4,262	4,556	4,745	4,903	5,033	5,131	5,172	5,153	5,074	115,762

Enterprise Value	162,743
Projection Period	46,981	28.9%
Terminal Value	115,762	71.1%

(−) Current Net Debt	17,023

Equity Value	145,720
(/) Outstanding Shares	917

Fair Price	$158.89

Sensitivity Analysis

WACC \ Terminal Growth Rate	2.5%	3.0%	3.5%	4.0%	4.5%
5.9%	$236	$270	$319	$394	$524
6.9%	$174	$192	$215	$246	$291
7.9%	$135	$146	$159	$175	$196
8.9%	$109	$116	$124	$134	$145
9.9%	$90	$95	$100	$106	$113

Current price: $86.04. Green = undervalued, Red = overvalued.

Fair Value

$132.01

Market Price

$86.04

Upside / Downside

+53.4%

Verdict

Undervalued

Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Canadian Pacific Kansas City Ltd.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 14.8% to 5.4% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 47, DPO 62, DIO 25). At a 7.9% WACC with mid-year discounting, the terminal value (85% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 14.6x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $132.05 per share, suggesting CP is undervalued by 53.5% at the current price of $86.04.

FCFF Present Value Calculation

WACC

7.87%

3% – 20%

EV/EBITDA Exit Multiple

14.64x

1x – 40x

Forecast Period

5 Yrs

+ Terminal Year

Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.

Currency: USD Millions

	2026	2027	2028	2029	2030	Terminal
Profit Before Tax	5,367	6,036	6,645	7,158	7,542	7,731
(−) Net Interest	778	875	963	1,038	1,093	1,121
(+) D&A	1,715	1,987	2,317	2,564	2,805	2,875
EBITDA	7,860	8,897	9,925	10,760	11,441	11,727

(−) Tax	1,115	1,253	1,380	1,487	1,566	—
(−) CapEx	2,492	2,802	3,085	3,323	3,502	—
(−) ΔWC	1,202	129	118	99	74	—
Free Cash Flow (FCF)	3,052	4,712	5,342	5,851	6,298	—

Peers' EBITDA Multiple						14.6x
Terminal Value						171,677
WACC / Discount Rate	7.87%

Timing of FCF (mid year)	0.5	1.5	2.5	3.5	4.5	5
Present Value of FCF	2,939	4,206	4,421	4,488	4,479	117,558

Enterprise Value	138,092
Projection Period	20,534	14.9%
Terminal Value	117,558	85.1%

(−) Current Net Debt	17,023
Equity Value	121,069
(÷) Outstanding Shares	917M
Fair Price	$132	+53.4%

Sensitivity Analysis

WACC \ EV/EBITDA Exit Multiple	10.6x	12.6x	14.6x	16.6x	18.6x
5.9%	$107	$127	$146	$165	$184
6.9%	$102	$120	$139	$157	$175
7.9%	$97	$115	$132	$150	$167
8.9%	$92	$109	$126	$142	$159
9.9%	$88	$104	$120	$136	$152

Current price: $86.04. Green = undervalued, Red = overvalued.

Based on default parameters

Fair Value

$176.02

Market Price

$86.04

Upside / Downside

+104.6%

Verdict

Undervalued

Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Canadian Pacific Kansas City Ltd.'s cash flows over 10 years with analyst estimates for the first 3–5 years, fading toward long-term GDP growth for the remaining years with line-by-line expense modeling. Revenue is projected revenue growing from 15.9% to 4.3% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 47, DPO 62, DIO 25). At a 7.9% WACC with mid-year discounting, the terminal value (74% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 14.6x to Year 11 EBITDA. After subtracting net debt, the equity value implies a fair price of $176.06 per share, suggesting CP is undervalued by 104.6% at the current price of $86.04.

FCFF Present Value Calculation

WACC

7.87%

3% – 20%

EV/EBITDA Exit Multiple

14.64x

1x – 40x

Forecast Period

5 Yrs

+ Terminal Year

Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.

Currency: USD Millions

	2026	2027	2028	2029	2030	2031	2032	2033	2034	2035	Terminal
Profit Before Tax	5,417	6,208	7,035	7,882	8,728	9,553	10,332	11,042	11,658	12,158	12,462
(−) Net Interest	785	900	1,020	1,142	1,265	1,385	1,498	1,600	1,690	1,762	1,806
(+) D&A	1,715	1,992	2,338	2,621	2,929	3,275	3,659	4,042	4,414	4,764	4,883
EBITDA	7,918	9,100	10,393	11,645	12,922	14,212	15,488	16,684	17,761	18,684	19,152

(−) Tax	1,125	1,289	1,461	1,637	1,813	1,984	2,146	2,293	2,421	2,525	—
(−) CapEx	2,515	2,882	3,266	3,659	4,052	4,435	4,797	5,126	5,412	5,644	—
(−) ΔWC	1,211	153	160	164	164	160	151	137	119	97	—
Free Cash Flow (FCF)	3,066	4,775	5,505	6,185	6,894	7,634	8,395	9,127	9,809	10,418	—

Peers' EBITDA Multiple											14.6x
Terminal Value											280,378
WACC / Discount Rate	7.87%

Timing of FCF (mid year)	0.5	1.5	2.5	3.5	4.5	5.5	6.5	7.5	8.5	9.5	5
Present Value of FCF	2,953	4,262	4,556	4,745	4,903	5,033	5,131	5,172	5,153	5,074	131,471

Enterprise Value	178,452
Projection Period	46,981	26.3%
Terminal Value	131,471	73.7%

(−) Current Net Debt	17,023
Equity Value	161,429
(÷) Outstanding Shares	917M
Fair Price	$176	+104.6%

Sensitivity Analysis

WACC \ EV/EBITDA Exit Multiple	10.6x	12.6x	14.6x	16.6x	18.6x
5.9%	$164	$187	$211	$235	$258
6.9%	$150	$171	$193	$214	$236
7.9%	$137	$156	$176	$196	$215
8.9%	$125	$143	$161	$179	$197
9.9%	$115	$131	$147	$164	$180

Current price: $86.04. Green = undervalued, Red = overvalued.

Based on default parameters

Trading Multiples

Fair Value

$91.76

Market Price

$86.04

Upside / Downside

+6.7%

Verdict

Undervalued

Using the industry peer median P/E Multiples multiple (trailing + forward), Canadian Pacific Kansas City Ltd. (CP) has a fair value of $91.76 based on 9 comparable companies in the Railroads industry.

P/E Valuation — Railroads

USD in millions except Fair Price. Subject company highlighted.

	Mkt Cap ($M)	Trailing P/E	Forward P/E
Canadian Pacific Kansas City Ltd.CP	78,907	25.8x	—
Quanta Services, Inc.PWR	112,655	110.4x	54.5x
Cummins Inc.CMI	93,770	33.1x	33.1x
FedEx CorporationFDX	90,332	22.5x	19.1x
CSX CorporationCSX	83,300	29.1x	23.5x
Illinois Tool Works Inc.ITW	73,422	24.3x	24.4x
Norfolk Southern CorporationNSC	70,112	24.5x	25.8x
Republic Services, Inc.RSG	62,270	29.4x	27.8x
United Rentals, Inc.URI	59,146	24.5x	21.8x
Thomson Reuters CorporationTRI	40,721	27.5x	25.2x
Industry Median		27.5x	25.2x
(*) Profit after tax		3,064
Equity Value		84,152
(/) Outstanding shares		917
Fair Price		$92

Fair Value

$80.42

Market Price

$86.04

Upside / Downside

-6.5%

Verdict

Overvalued

Using the industry peer median EV/EBITDA multiple (trailing + forward), Canadian Pacific Kansas City Ltd. (CP) has a fair value of $80.42 based on 9 comparable companies in the Railroads industry.

EV/EBITDA Valuation — Railroads

USD in millions except Fair Price. Subject company highlighted.

	Mkt Cap ($M)	Trailing EV/EBITDA	Forward EV/EBITDA
Canadian Pacific Kansas City Ltd.CP	78,907	15.5x	—
Quanta Services, Inc.PWR	112,655	45.1x	36.9x
Cummins Inc.CMI	93,770	18.4x	18.3x
FedEx CorporationFDX	90,332	11.6x	10.9x
CSX CorporationCSX	83,300	17.4x	16.6x
Illinois Tool Works Inc.ITW	73,422	17.5x	17.6x
Norfolk Southern CorporationNSC	70,112	14.6x	14.1x
Republic Services, Inc.RSG	62,270	12.0x	11.6x
United Rentals, Inc.URI	59,146	10.5x	11.1x
Thomson Reuters CorporationTRI	40,721	13.8x	14.8x
Industry Median		14.6x	14.8x
(*) EBITDA		6,199
= Enterprise Value		90,779
(-) Net Debt		17,023
Equity Value		73,756
(/) Outstanding shares		917
Fair Price		$80

Fair Value

$38.24

Market Price

$86.04

Upside / Downside

-55.5%

Verdict

Overvalued

Using the industry peer median EV/Revenue multiple (trailing + forward), Canadian Pacific Kansas City Ltd. (CP) has a fair value of $38.24 based on 9 comparable companies in the Railroads industry.

EV/Revenue Valuation — Railroads

USD in millions except Fair Price. Subject company highlighted.

	Mkt Cap ($M)	Trailing EV/Revenue	Forward EV/Revenue
Canadian Pacific Kansas City Ltd.CP	78,907	8.6x	—
Quanta Services, Inc.PWR	112,655	4.0x	3.3x
Cummins Inc.CMI	93,770	2.9x	2.9x
FedEx CorporationFDX	90,332	1.4x	1.3x
CSX CorporationCSX	83,300	7.2x	6.9x
Illinois Tool Works Inc.ITW	73,422	5.1x	5.1x
Norfolk Southern CorporationNSC	70,112	7.0x	6.8x
Republic Services, Inc.RSG	62,270	3.8x	3.7x
United Rentals, Inc.URI	59,146	4.7x	4.9x
Thomson Reuters CorporationTRI	40,721	5.6x	6.0x
Industry Median		4.7x	4.9x
(*) Revenue		11,158
= Enterprise Value		52,094
(-) Net Debt		17,023
Equity Value		35,071
(/) Outstanding shares		917
Fair Price		$38

PEG Fair Value

Fair Value

$26.70

Market Price

$86.04

Upside / Downside

-69.0%

Verdict

Overvalued

Using the PEG framework with historical EPS growth of 8.0% plus 0.8% dividend yield, the company has a fair value of $26.70 based on TTM EPS (FY2025) of $3.34. The current PEG ratio is 9.59.

PEG Ratio

9.59Expensive

01.02.03.0+

PEG = P/E ÷ (Growth + Yield) = 25.8 ÷ (1.9% + 0.8%) = 9.59

PEG < 1 = bargain, 1–1.5 = fair, > 2 = expensive.

Growth Category: Slow GrowerPEG less reliable

PEG tends to undervalue slow growers — consider dividend yield and asset value instead.

Fair Value Calculation

EPS Growth RateHistorical	1.9%
Dividend Yield	+0.8%
Adjusted Growth (clamped 8–25%)Clamped	8.0%
Fair P/E	8.0x
TTM EPS (FY2025)	$3.34
Fair Value	$26.70

Growth Analysis

Forward Growth

No analyst estimates available.

Historical GrowthActive

Year	Net Income	EPS	YoY
FY2021	$2.1B	$3.09	—
FY2022	$2.6B	$2.79	-9.8%
FY2023	$2.9B	$3.12	+11.7%
FY2024	$2.8B	$2.95	-5.5%
FY2025	$3.1B	$3.34	+13.3%

4Y Historical EPS CAGR: 1.9%

Earnings Power Value

Fair Value

$37.13

Market Price

$86.04

Upside / Downside

-56.8%

Verdict

Overvalued

Using the Earnings Power Value framework with a WACC of 7.9% and normalized earnings of $4.0B, the company has a fair value of $37.13 per share. The EPV range is $28.21 – $50.25 based on WACC sensitivity (6.4% – 9.4%).

Currency: USD Millions

	Low	Selected	High
Normalized Earnings	4,019	4,019	4,019
(/) WACC	9.4%	7.9%	6.4%
Enterprise Value	42,898	51,076	63,108
(-) Net debt	17,023	17,023	17,023
Equity Value	25,875	34,053	46,085
(/) Outstanding shares	917	917	917
Fair Price	$28.21	$37.13	$50.25

Dividend Discount Model

Fair Value

$12.35

Market Price

$86.04

Upside / Downside

-85.6%

Verdict

Overvalued

Using the Two-Stage Dividend Discount Model with a Cost of Equity of 9.0% and projected dividend growth of 4.0%, the fair value is $12.35 per share. The DDM range is $8.32 – $21.26 based on sensitivity analysis across Cost of Equity and growth rate assumptions.

Dividend Profile

Current DPS

$0.64

Dividend Yield

0.77%

Payout Ratio

19.2%

Dividend Coverage

5.20x

FCF Payout Ratio36.7%

DPS CAGR (4Y)4.0%

Historical Dividends Per Share

Year	DPS	Payout Ratio	YoY Growth
2025	$0.64	19.2%	+14.4%
2024	$0.56	19.1%	+0.2%
2023	$0.56	18.0%	-0.1%
2022	$0.56	20.1%	+2.1%
2021	$0.55	17.8%	—

Dividend Projections (5-Year)

Year	Projected DPS	Growth	Discount Factor	Present Value
2026	$0.67	4.0%	0.9175	$0.61
2027	$0.69	4.0%	0.8418	$0.58
2028	$0.72	4.0%	0.7723	$0.56
2029	$0.75	4.0%	0.7086	$0.53
2030	$0.78	4.0%	0.6501	$0.51
Terminal Value	$0.81 DPS	3.5%		$9.56

PV of Projected Dividends$2.79

PV of Terminal Value$9.56

Fair Value per Share$12.35

Sensitivity Analysis

Fair value under different Cost of Equity (rows) and DPS Growth Rate (columns) assumptions.

Ke \ Growth	2.0%	3.0%	4.0%	5.0%	6.0%
7.0%	$18	$19	$19	$20	$21
8.0%	$14	$14	$15	$16	$17
9.0%	$11	$12	$12	$13	$13
10.0%	$10	$10	$10	$11	$11
11.0%	$8	$9	$9	$9	$10

Disclaimer: Sweet Value Lab provides estimated intrinsic values for informational purposes only. This is not financial advice. All models rely on assumptions that may not reflect future performance. Always do your own research before making investment decisions.