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Canadian rail stocks hit 52-week highs, dividends and stock splits; despite derailments

Chris Parry Chris Parry,
0 Comments| October 23, 2013

Canadian Pacific Railway (TSX:T.CP, Stock Forum) hit a 52-week high on record earnings Wednesday, climbing $13.79 per share to $148.53, with $195 million in shares changing hands on the day.

Q3 revenues were a record high at $1.5 billion, up 6%, while CP‘s operating ratio hit the lowest point in company history. Reported net income was $324 million, an increase of 45%.

Free cash over the first nine months of 2013 was $318 million, compared to $21 million in the comparable period of 2012.
Not to be outdone, Canadian National Railway (TSX:T.CNR, Stock Forum) announced after the Tuesday trading close they would engage in a share repurchase program, a Q4 cash dividend, and a two for one stock split.

According to a company release, “The new share repurchase program will be a normal-course-issuer bid to purchase, for cancellation, up to 15 million common shares before adjusting for the stock split, representing approximately 4.1 per cent of the common shares issued and outstanding of the Company not held by insiders on Oct. 15, 2013. On that date 417,992,780 CN common shares were issued and outstanding.”

It continued, “CN repurchased 14.7 million common shares under its share repurchase program announced in October 2012, at a weighted-average price of C$95.35 per share, excluding brokerage fees, returning C$1.4 billion to shareholders.”

All of this strong news for rail follows on a recent shift towards the railway transport sector as an alternative to oil pipelines, which have come under fire due to the potential for spills.

Rail has had its share of issues, with a recent Alberta derailment keeping residents from their homes while a controlled burn dealt with chemicals at the scene, and the Lec Magentic derailment of a few months back brought down the MM&A railroad.

But with billionaires Carl Icahn and Warrne Buffett recently having shifted their focus to rail, among others, Canadian rail investors are enjoying the ride.

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