Canadian Pacific Kansas City (Canadian Pacific Kansas City) Intrinsic Value: DCF (Dividends Based) : $54.84 (As of Apr. 27, 2024)

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What is Canadian Pacific Kansas City Intrinsic Value: DCF (Dividends Based)?

As of today (2024-04-27), Canadian Pacific Kansas City's intrinsic value calculated from the Discounted Dividend model is $54.84.

Note: Discounted Dividend model is only suitable for companies who have a consistant distribution history. If the company's dividends does not remain steady over a long period, results may not be accurate due to the low consistency. The model is also only suitable for predictable companies (Business Predictability Rank higher than 1-Star) with dividend payments. If the company's Predictability Rank is 1-Star or Not Rated, or if the company does not pay dividend, the data will not be stored into our database.

Canadian Pacific Kansas City's Predictability Rank is 1-Star. Thus, this page is only used for demonstration purposes and the DCF related results in the screener and portfolio will appear as zero.

Margin of Safety % (DCF Dividends Based) using Discounted Dividend Model for Canadian Pacific Kansas City is -48.94%.

The historical rank and industry rank for Canadian Pacific Kansas City's Intrinsic Value: DCF (Dividends Based) or its related term are showing as below:

During the past 13 years, the highest Price-to-Intrinsic-Value-DCF (Dividends Based) Ratio of Canadian Pacific Kansas City was 1.39. The lowest was 0.76. And the median was 1.07.

CP's Price-to-DCF (Dividends Based) is not ranked ^*
in the Transportation industry.
Industry Median: 0.86
* Ranked among companies with meaningful Price-to-DCF (Dividends Based) only.

Canadian Pacific Kansas City Intrinsic Value: DCF (Dividends Based) Historical Data

The historical data trend for Canadian Pacific Kansas City's Intrinsic Value: DCF (Dividends Based) can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Canadian Pacific Kansas City Intrinsic Value: DCF (Dividends Based) Chart

Canadian Pacific Kansas City Annual Data

Trend

Dec14

Dec15

Dec16

Dec17

Dec18

Dec19

Dec20

Dec21

Dec22

Dec23

Intrinsic Value: DCF (Dividends Based)

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52.26

68.96

70.96

60.82

Canadian Pacific Kansas City Quarterly Data
	Jun19	Sep19	Dec19	Mar20	Jun20	Sep20	Dec20	Mar21	Jun21	Sep21	Dec21	Mar22	Jun22	Sep22	Dec22	Mar23	Jun23	Sep23	Dec23	Mar24
Intrinsic Value: DCF (Dividends Based)	Get a 7-Day Free Trial															64.56	58.28	54.40	-	-

Competitive Comparison of Canadian Pacific Kansas City's Intrinsic Value: DCF (Dividends Based)

For the Railroads subindustry, Canadian Pacific Kansas City's Price-to-DCF (Dividends Based), along with its competitors' market caps and Price-to-DCF (Dividends Based) data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

Canadian Pacific Kansas City's Price-to-DCF (Dividends Based) Distribution in the Transportation Industry

For the Transportation industry and Industrials sector, Canadian Pacific Kansas City's Price-to-DCF (Dividends Based) distribution charts can be found below:

* The bar in red indicates where Canadian Pacific Kansas City's Price-to-DCF (Dividends Based) falls into.

Canadian Pacific Kansas City Intrinsic Value: DCF (Dividends Based) Calculation

This is the intrinsic value calculated from the Discounted Dividend Model with default parameters. The calculation method is the same as Discounted Cash Flow model except adjusted dividend are used in the calculation instead of free cash flow. This is the default method of calculation with GuruFocus DCF calculator.

Usually a two-stage model is used in calculating the intrinsic value with discounted cash flow model. The first stage is called growth stage; the second is called the terminal stage. In the growth stage the company grows at a faster rate. Because it cannot grow at that rate forever, a lower rate is used for the terminal stage.

GuruFocus DDM calculator is a two-stage model. The default values are defined as:

1. Discount Rate: d = 10%
A reasonable discount rate assumption should be at least the long term average return of the stock market, which can be estimated from risk free rate plus risk premium of stock market. GuruFocus uses 10-Year Treasury Constant Maturity Rate as the risk-free rate and rounded up to the nearest integer. It is updated daily. The current risk-free rate is 3.44%. Please go to Economic Indicators page for more information. Please note that we use the 10-Year Treasury Constant Maturity Rate of the country/region where the company is headquartered. If the data for that country/region is not available, then we will use the 10-Year Treasury Constant Maturity Rate of the United States as default. Then we added a risk premium of 6% to get the estimated discount rate. Some investors use their expected rate of return, which is also reasonable. A typical discount rate can be anywhere between 6% - 20%.

2. Dividend Growth Rate in the growth stage: g1 = 13.20%
The Growth Rate in the growth stage is initially set as the default 10-Year Dividend Growth Rate. In cases where the 10-year growth rate is unavailable, it defaults to using the 5-Year Dividend Growth Rate. If both the 10-year and 5-year growth rates are unavailable, the system defaults to the 3-Year Dividend Growth Rate.
However, it's important to note that there is a growth rate range. If the calculated growth rate exceeds 20%, it will be capped at 20%. Conversely, if the calculated growth rate falls below 5%, it will be adjusted to 5% to maintain a reasonable range.
=> Canadian Pacific Kansas City's average Dividend Growth Rate in the past 10 years was 13.20%, which is between 5% and 20%. => GuruFocus defaults => Growth Rate: 13.20%

3. Years of Growth Stage: y1 = 10

4. Terminal Growth Rate: g2 = 4%

5. Dividends per Share: adjusted dividends per share = $2.5317.
GuruFocus uses adjusted dividends per share by default to ensure that the valuation reflects the total value of the company, as the actual dividend is only a portion of the total value.

All of the default settings can be changed in the DCF calculator and the results are calculated automatically.

Canadian Pacific Kansas City's Intrinsic Value: DCF (Dividends Based) for today is calculated as:

Intrinsic Value: DCF (Dividends Based)	=	Dividends per Share	*	{[(1+g1)/(1+d)	+	(1+g1)^2/(1+d)^2	+	...	+	(1+g1)^10/(1+d)^10]
	+	(1+g1)^10/(1+d)^10	*	[(1+g2)/(1+d)	+	(1+g2)^2/(1+d)^2	+	...	+	(1+g2)^10/(1+d)^10]}

set x = (1+g1)/(1+d) = (1+0.132)/(1+0.1) = 1.0290909090909
and y = (1+g2)/(1+d) = (1+0.04)/(1+0.1) = 0.94545454545455

Intrinsic Value: DCF (Dividends Based)

Dividends per Share

{[x

x^2

...

x^10]

x^10

y^2

...

y^10]}

Dividends per Share

(1-x^10)

(1-x)

x^10

(1-y^10)

(1-y)]

2.5317

21.6606

54.84

Margin of Safety % (DCF Dividends Based)	=	(Intrinsic Value: DCF (Dividends Based)	-	Current Price)	/	Intrinsic Value: DCF (Dividends Based)
	=	(54.84	-	81.68)	/	54.84
	=	-48.94 %

Canadian Pacific Kansas City (NYSE:CP) Intrinsic Value: DCF (Dividends Based) Explanation

Unlike valuation methods such as Net Current Asset Value, Tangible Book per Share, Graham Number, Median PS Value etc, discounted Dividends model evaluates the companies based on their power of future dividend distribution instead of their assets.

Be Aware

What you need to know about Discounted Dividends model:

1. The Discounted Dividends model evaluates a company based on its future dividends distribution power
2. Dividend growth is taken into account; therefore a company with a higher dividend growth rate is worth more if everything else is the same.
3. Since we are projecting future growth, it is assumed that the company will grow at the same rate as it did during the past 10 years. Therefore this model works better for the companies with consistently steady dividends distributed.
4. The Discounted Dividends model works poorly for inconsistent dividends distributor like high growth companies.
5. Your expected return from the investment is a reasonable discount rate assumption.
6. A larger margin of safety should be required for companies with less dividends distributed.

You can screen for stocks that trade below their Intrinsic Value: DCF (FCF Based) and Intrinsic Value: DCF (Earnings Based) and Intrinsic Value: DCF (Dividends Based) with the GuruFocus All-in-One Screener. Companies with a high Predictability Rank that trade at a discount to their Intrinsic Value: DCF (FCF Based) and Intrinsic Value: DCF (Earnings Based) can be found in the screen of Undervalued Predictable Companies.

Canadian Pacific Kansas City Intrinsic Value: DCF (Dividends Based) Related Terms

Thank you for viewing the detailed overview of Canadian Pacific Kansas City's Intrinsic Value: DCF (Dividends Based) provided by GuruFocus.com. Please click on the following links to see related term pages.

Canadian Pacific Kansas City (Canadian Pacific Kansas City) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Industrials » Transportation » Canadian Pacific Kansas City Ltd (NYSE:CP) » Definitions » Intrinsic Value: DCF (Dividends Based)

Comparable Companies

Traded in Other Exchanges

X88:Germany CP:Canada CPRL34:Brazil

Address

7550 Ogden Dale Road S.E., Calgary, AB, CAN, T2C 4X9

Website

https://www.cpr.ca

Canadian Pacific Kansas City is a Class-1 railroad operating on track that spans across most of Canada and into parts of the Midwestern and Northeastern United States. Following the April 2023 Kansas City Southern merger, CP operates new single-line-haul services from Canada and the Upper Midwest down through Texas, the Gulf of Mexico, and into Mexico. It also hauls cross border and intra Mexico freight via operating concessions on 3,300 miles of rail in Mexico. CP hauls shipments of grain, intermodal containers, energy products (like crude and frac sand), chemicals, plastics, coal, fertilizer and potash, automotive products, and a diverse mix of other merchandise.

Executives

John Kenneth Brooks	officer: SVP & Chief Marketing Officer	7550 OGDEN DALE ROAD S.E., CALGARY A0 T2C 4X9
Mike Foran	officer: VP Network Transportation	7550 OGDEN DALE ROAD S.E., CALGARY A0 T2C 4X9
Clements James Dominic Luther	officer: VP Planning & Transportation	7550 OGDEN DALE ROAD S.E., CALGARY A0 T2C 4X9
Mark Kenneth Wallace	officer: VP Corp Affrs & Chief of Staff	7550 OGDEN DALE ROAD S.E., CALGARY A0 T2C 4X9
E Hunter Harrison	director, officer: Chief Executive Officer	2708 SHELTINGHAM, WELLINGTON FL 33414
Trafton Gordon T. Ii	director	2632 SUTTON CIRCLE, NAPERVILLE IL 60564
Ubavka Rebecca Macdonald	director	130 KING STREET WEST, TORONTO A6 M5X 1E1
Jane L Peverett	director	1489 MARINE DRIVE, SUITE 802, WEST VANCOUVER A1 V7T 1B8
Peter John Edwards	officer: VP HR & Labour Relations	7550 OGDEN DALE ROAD S.E., CALGARY A0 T2C 4X9
Robert Allen Johnson	officer: Executive VP Operations	7550 OGDEN DALE ROAD S.E., CALGARY A0 T2C 4X9
John E Derry	officer: Vice-President Human Resources	7550 OGDEN DALE ROAD S.E., CALGARY A0 T2C 4X9
William R. Fatt	director	129 ROCHESTER AVENUE, TORONTO A6 M4N 1N9
Gillian H Denham	director	C/O CANADIAN PACIFIC RAILWAY LIMITED, 7550 OGDEN DALE ROAD S.E., CALGARY A0 T2C 4X9
Nadeem Velani	officer: Interim VP and CFO	7550 OGDEN DALE ROAD S. E., CALGARY A0 T2C 4X9
Pershing Square Capital Management, L.p.	director	787 11TH AVENUE, 9TH FLOOR, NEW YORK NY 10019