ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. Canadian Pacific Kansas City's annualized return on capital (ROC %) for the quarter that ended in Mar. 2026 was 4.40%.
As of today (2026-06-24), Canadian Pacific Kansas City's WACC % is 9.77%. Canadian Pacific Kansas City's ROC % is -3.45% (calculated using TTM income statement data).
Canadian Pacific Kansas City earns returns that do not match up to its cost of capital. It will destroy value as it grows.
Canadian Pacific Kansas City (NYSE:CP) ROC % Explanation
ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. The reason book values of debt and equity are used is because the book values are the capital the company received when issuing the debt or receiving the equity investments.
There are four key components to this definition. The first is the use of operating income or EBIT rather than net income in the numerator. The second is the tax adjustment to this operating income or EBIT, computed as a hypothetical tax based on an effective or marginal tax rate. The third is the use of book values for invested capital, rather than market values. The final is the timing difference; the capital invested is from the end of the prior year whereas the operating income or EBIT is the current year's number.
Why is ROC % important?
Because it costs money to raise capital. A firm that generates higher returns on investment than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.
As of today, Canadian Pacific Kansas City's WACC % is 9.77%. Canadian Pacific Kansas City's ROC % is -3.45% (calculated using TTM income statement data).
Canadian Pacific Kansas City earns returns that do not match up to its cost of capital. It will destroy value as it grows.
Be Aware
Like ROE % and ROA %, ROC % is calculated with only 12 months of data. Fluctuations in the company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.
Canadian Pacific Kansas City ROC % Related Terms
Canadian Pacific Kansas City ROC % Historical Data
* 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.
Note:
The Operating Income data used here is four times the quarterly (Mar. 2026) data.
The tax rate is limited to between 0% and 100%.
* 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.
Canadian Pacific Kansas City (CP) has a ROC % of 4.40% as of Mar. 2026. Return on capital is the ratio of current-period net income to average two-period capital. View historical data on Canadian Pacific Kansas City and its competitors.
Is Canadian Pacific Kansas City's ROC % too high?
Canadian Pacific Kansas City's current ROC % is 4.40%. The Transportation industry median ROC % is 4.69. Canadian Pacific Kansas City's value of 4.40% is 6.2% below this industry median. Overall, Canadian Pacific Kansas City has a GF Score™ of 80/100 and is considered Fairly Valued, reflecting its overall financial health beyond just this single metric.
How does Canadian Pacific Kansas City's ROC % compare to UNP and CSX?
Canadian Pacific Kansas City's ROC % of 4.40% can be compared against companies in the Transportation industry. The industry median ROC % is 4.69. Canadian Pacific Kansas City's value of 4.40% is 6.2% below this benchmark. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good ROC % for a Transportation company?
The median ROC % among Transportation companies is 4.69, based on 994 companies in the industry. Companies in the top quartile (top 25%) have a ROC % significantly above this median, while those in the bottom quartile fall well below. However, ROC % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Canadian Pacific Kansas City's current ROC % of 4.40% is 6.2% below the industry median. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high ROC % mean?
A high ROC % can signal that a stock is expensive relative to its fundamentals. Return on capital is the ratio of current-period net income to average two-period capital. View historical data on Canadian Pacific Kansas City and its competitors. For the Transportation industry, the median ROC % is 4.69 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Canadian Pacific Kansas City's current ROC % is 4.40%. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Canadian Pacific Kansas City stock overvalued right now?
Based on GuruFocus' analysis, Canadian Pacific Kansas City (CP) is currently considered Fairly Valued. The stock's GF Value™ is $86.98, compared to a current price of $84.78 — trading 2.5% below its estimated fair value. The current ROC % is 4.40% and 6.2% below the Transportation industry median of 4.69. Canadian Pacific Kansas City's overall GF Score™ is 80/100 with 7 warning signs to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is ROC % calculated?
ROC % is calculated from a company's financial statements. For Canadian Pacific Kansas City (CP), the current ROC % is 4.40% as of Mar. 2026. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Is Canadian Pacific Kansas City (CP) Overvalued in 2026?
Based on GuruFocus' analysis, Canadian Pacific Kansas City stock appears to be undervalued.
The current stock price of $84.78 is trading 2.5% below its estimated GF Value™ of $86.98.
GuruFocus considers Canadian Pacific Kansas City to be Fairly Valued.
Key valuation signals for CP:
ROC %: 4.40%
GF Value™: $86.98 vs. price of $84.78 (2.5% below fair value)
Industry Position: 6.2% below the Transportation median
No single metric tells the full story. See the CP stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
Canadian Pacific Kansas City is a Class I railroad operating on tracks that span most of Canada and into parts of the Midwestern and Northeastern United States. Following the April 2023 Kansas City Southern merger, CPKC operates new single-linehaul 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 more than 3,000 miles of rail in Mexico. CPKC 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.
80GF Score
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