Making sense of the markets this week: October 27, 2024

Despite these setbacks, CPKC posted an income gain of 7% year over year. The four categories that made the most impact were grain, energy, plastics and chemicals, and they grew revenues by 11%. CPKC says the shipment of wheat to Mexico from the Canadian and American Prairies over the past 12 months was exactly the type of “synergy win” that it was hoping for when the former Canadian Pacific acquired Kansas City Southern back in 2021. This railway remains the only one to span Canada, the United States and Mexico.

CNR CEO Tracy Robinson commented on the railway’s operational challenges. “Our scheduled operating plan demonstrated its resilience in the third quarter, allowing us to adapt our operations to challenges posed by wildfires and prolonged labor issues,” she said. “Our operations recovered quickly and the railroad is running well. As we close 2024, we will continue to focus on recovering volumes, growth, and ensuring our resources are aligned to demand.”

CNR’s revenues were up 3% year over year; however, increased expenses meant the company’s operating ratio rose 1.1% to 63.1% (indicating that expenses are growing as a share of revenue). The railway announced it was  raising its quarterly dividend from $0.79 to $0.845. This raise of nearly 7% is right in line with CNR’s mission to conservatively raise its dividend payouts each year.

For more information on these railroads, check out my article on Canadian railway stocks at MillionDollarJourney.ca.

Canada’s best dividend stocks

Rough day for Rogers

Thursday’s revenue miss left some Rogers shareholders shaking their heads.

Rogers earnings highlights

Here’s what the large mobile company reported this week:

Rogers Communications (RCI/TSX): Earnings per share of $1.42 (versus $1.34 predicted) and revenues of $5.13 billion (versus $5.17 predicted).

While solid earnings numbers did take away some of the sting, Rogers’ share price was down 3% on Thursday. Lower-than-expected numbers for new wireless customers were at the root of low revenue growth. The oligopolistic Canadian wireless market remains uncharacteristically competitive as Rogers, Telus and Bell all continue to fight for market share. That competition is hurting profit margins for all three telecommunications giants at the moment. (Unlike in past yearswhen the three telcos all enjoyed charging some of the highest wireless plan fees in the world.)

One highlight for Rogers was its sports revenue vertical, which was up 11% from last quarter. Rogers has really doubled down on its sports media strategy over the last few years and now owns a controlling share of the:

Toronto Blue Jays in the Major League Baseball league (MLB)

Toronto Maple Leafs in the National Hockey League (NHL)

Toronto Raptors in the National Basketball Association (NBA)

Toronto FC in Major League Soccer (MLS)

Toronto Argonauts in the Canadian Football League (CFL)

SportsNet, a major Canadian sports network

Toronto’s Rogers Centre and Scotiabank Arena venues

Naming rights of sports venues in Edmonton, Toronto and Vancouver

National NHL media rights in Canada

Local media rights to the NHL’s Vancouver Canucks, Calgary Flames and Edmonton Oilers

Partial local media rights to the Maple Leafs and Raptors

Several minor-league franchises and esports (gaming) teams

Despite owning all those household-name sports assets, it’s worth noting that Rogers’ wireless and cable divisions were responsible for close to 90% of revenues, with sports and media making up the rest.

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