CP
Canadian Pacific Kansas City Ltd.
$86.58
Stable Earnings Power
65%
P/Adj-EPS × Normalized Multiple
Strong
·
Conviction
Overvalued
Trading 60.9% above fair value
You pay
$86.58
Bear
$43.05
Fair
$53.82
Bull
$64.58
Bear
$43.05
-50.3%
$3.21 × 13x P/E
Fair
$53.82
-37.8%
$3.21 × 17x P/E
Bull
$64.58
-25.4%
$3.21 × 20x P/E
Adjust Assumptions
16.8x
3.21$
Key Value Driver
Normalized P/E multiple (17x base case)
Implied Market Multiple
27.0x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (43 analysts)
$110.40
Divergence from AlphaVal
51%
Summary
Applying a 17x P/E to adjusted EPS of $3.21, the base-case value is $53.82 per share. DDM cross-check: $17.58.
Warnings
Dividend-based valuation: $17.58 (below our primary estimate by 67%). Large gaps may signal the dividend doesn't reflect full earning power.
Wall Street's average price target is $110.40 (from 43 analysts). Our estimate is 51% below the consensus -- consider that gap carefully.
Financial statements were converted from CAD into USD using USDCAD at 0.7110 USD per CAD.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples