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Will High Costs Mar Kansas City Southern (KSU) Q3 Earnings?
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Kansas CitySouthern is scheduled to report third-quarter 2017 results on Oct 20, before the market opens.
The company beat on earnings and revenues in the last quarter with earnings of $1.33 per share exceeding the Zacks Consensus Estimate of $1.26. The bottom line expanded 9% on a year-over-year basis. Operating revenues of $656.4 million improved 15.5% year over year, surpassing the Zacks Consensus Estimate of $620.6 million.
However, back-to-back hurricanes (Harvey and Irma) havedisrupted railroad operations. Shares of Kansas City Southern have slipped 0.1% over the last three months in contrast to the industry’s 0.8% increase during the period.
Let’s see, how things shape up this earnings season.
Factors at Play
Rise in fuel costs due to natural calamities is likely to hurt the company’s bottom line in the third quarter.
Discouraging performance of the intermodal segment might also hamper results in the soon-to-be-reported quarter. The Zacks Consensus Estimate for third-quarter intermodal revenues is pegged at $94 million.
Kansas City Southern’s trailing 12-month return on equity (ROE) undercuts its growth potential. Not only has the company’s 11.4% ROE been gradually decreased over the last year, it compares unfavorably with its industry’s ROE of 20.7.
The stock has seen the Zacks Consensus Estimate for the soon-to-be-reported quarter’s earnings being revised 2.9% downward over the last 30 days, evidently reflecting a negative sentiment surrounding the stock.
However, the company’s efforts to reward shareholders through dividend payments and buybacks are impressive. To this end, in August, Kansas City Southern’s board of directors approved a new share repurchase program worth $800 million. Improvement pertaining to carloads are expected to buoy the top line. The Zacks Consensus Estimate for third-quarter carloads reflects a 6.1% rise on a sequential basis.
Earnings Whispers
Our proven model does not conclusively show that Kansas City Southern is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a solid Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. However, that is not the case here as elaborated below.
Zacks ESP: Kansas City Southern has an Earnings ESP of-0.57%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Kansas City Southern carries a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s negative ESP leaves surprise prediction inconclusive. You can see the complete list of today’s Zacks #1 Rank stocks here.
We caution against stocks with Zacks Rank #4 or 5 (Sell rated) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Investors interested in the broader Transportation sector may consider SkyWest, Inc. (SKYW - Free Report) , Norfolk Southern Corporation (NSC - Free Report) and Expeditors International of Washington, Inc. (EXPD - Free Report) as our model shows these to consist of the right combination of elements to beat on earnings in their next releases.
SkyWest has an Earnings ESP of +1.03%. This Zacks #3 Ranked company will report third-quarter earnings numbers on Oct 25.
Norfolk Southern has an Earnings ESP of +0.67% and carries a Zacks Rank of 3. The company will report third-quarter 2017 resultson Oct 25.
Expeditors is also #3 Ranked with an Earnings ESP of +1.68%. The company will report third-quarter 2017 financial numbers on Nov 7.
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Image: Bigstock
Will High Costs Mar Kansas City Southern (KSU) Q3 Earnings?
Kansas City Southern is scheduled to report third-quarter 2017 results on Oct 20, before the market opens.
The company beat on earnings and revenues in the last quarter with earnings of $1.33 per share exceeding the Zacks Consensus Estimate of $1.26. The bottom line expanded 9% on a year-over-year basis. Operating revenues of $656.4 million improved 15.5% year over year, surpassing the Zacks Consensus Estimate of $620.6 million.
However, back-to-back hurricanes (Harvey and Irma) havedisrupted railroad operations. Shares of Kansas City Southern have slipped 0.1% over the last three months in contrast to the industry’s 0.8% increase during the period.
Let’s see, how things shape up this earnings season.
Factors at Play
Rise in fuel costs due to natural calamities is likely to hurt the company’s bottom line in the third quarter.
Discouraging performance of the intermodal segment might also hamper results in the soon-to-be-reported quarter. The Zacks Consensus Estimate for third-quarter intermodal revenues is pegged at $94 million.
Kansas City Southern’s trailing 12-month return on equity (ROE) undercuts its growth potential. Not only has the company’s 11.4% ROE been gradually decreased over the last year, it compares unfavorably with its industry’s ROE of 20.7.
The stock has seen the Zacks Consensus Estimate for the soon-to-be-reported quarter’s earnings being revised 2.9% downward over the last 30 days, evidently reflecting a negative sentiment surrounding the stock.
However, the company’s efforts to reward shareholders through dividend payments and buybacks are impressive. To this end, in August, Kansas City Southern’s board of directors approved a new share repurchase program worth $800 million. Improvement pertaining to carloads are expected to buoy the top line. The Zacks Consensus Estimate for third-quarter carloads reflects a 6.1% rise on a sequential basis.
Earnings Whispers
Our proven model does not conclusively show that Kansas City Southern is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a solid Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. However, that is not the case here as elaborated below.
Zacks ESP: Kansas City Southern has an Earnings ESP of -0.57%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Kansas City Southern carries a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s negative ESP leaves surprise prediction inconclusive. You can see the complete list of today’s Zacks #1 Rank stocks here.
We caution against stocks with Zacks Rank #4 or 5 (Sell rated) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Kansas City Southern Price and EPS Surprise
Kansas City Southern Price and EPS Surprise | Kansas City Southern Quote
Stocks to Consider
Investors interested in the broader Transportation sector may consider SkyWest, Inc. (SKYW - Free Report) , Norfolk Southern Corporation (NSC - Free Report) and Expeditors International of Washington, Inc. (EXPD - Free Report) as our model shows these to consist of the right combination of elements to beat on earnings in their next releases.
SkyWest has an Earnings ESP of +1.03%. This Zacks #3 Ranked company will report third-quarter earnings numbers on Oct 25.
Norfolk Southern has an Earnings ESP of +0.67% and carries a Zacks Rank of 3. The company will report third-quarter 2017 resultson Oct 25.
Expeditors is also #3 Ranked with an Earnings ESP of +1.68%. The company will report third-quarter 2017 financial numbers on Nov 7.
5 Trades Could Profit "Big-League" from Trump Policies
If the stocks above spark your interest, wait until you look into companies primed to make substantial gains from Washington's changing course.
Today Zacks reveals 5 tickers that could benefit from new trends like streamlined drug approvals, tariffs, lower taxes, higher interest rates, and spending surges in defense and infrastructure.
See these buy recommendations now >>