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Canadian Pacific's (CP +0.6%) four recent accidents and derailments are expected to pose a $25M...

Canadian Pacific's (CP +0.6%) four recent accidents and derailments are expected to pose a $25M drag on Q2 earnings, or $0.07/share, J.P. Morgan says, but the firm doesn't think the mishaps point to any broader issue surrounding CP's restructuring. While some of the quarter's potential upside is removed, the firm still believes results will begin to reflect positive changes underway.
Comments (2)
  • Michael Blair
    , contributor
    Comments (4519) | Send Message
     
    The four derailments are likely the first of many. Headcount reductions, a culture of fear, reductions in service and maintenance expenditures, running longer trains and running them faster - these are the "positive changes underway" and for most observers they are not so positive. Putting lives and communities at risk for short term stock performance is reprehensible and irresponsible.

     

    The low hanging fruit has been plucked, Ackman is heading for the exit doors, and the benefits of higher oil transportation are more likely to be ephemeral than permanent as pipeline capacity is steadily added to de-bottleneck the industry.

     

    Regardless of all the foregoing, the stock is discounting over $1 billion in annual net income, a level that has yet to be achieved and may never be realized.

     

    I am short CP and will add to that short by buying puts since the lending post is getting too crowded for my liking.
    8 Jun 2013, 06:57 PM Reply Like
  • 85589
    , contributor
    Comments (3) | Send Message
     
    They are not inspecting trains like they should so there will be more. Same thing happened to CN and some of it is still in the courts. OMG.
    9 Jun 2013, 08:21 PM Reply Like
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