Kansas City Southern reported second-quarter 2016 earnings (on an adjusted basis) of $1.22 per share, beating the Zacks Consensus Estimate of $1.04. Earnings also improved 18.4% on a year-over-year basis, thanks to lower costs.
Including special items, the Kansas City, MO-based railroad operator reported earnings of $1.11 per share in the second quarter of 2016, up 10% year over year. Total revenue came in at $569 million, down 3% year over year and also below the Zacks Consensus Estimate of $574 million.
The year-over-year decline can be primarily attributed to a 16% drop in revenues at the Energy segment. The Mexican peso depreciation and lower U.S. fuel prices also hurt results.
In the reported quarter, operating income came in at $220 million, up 18% year over year. Meanwhile, operating ratio (operating expenses as a percentage of revenues) improved to 61.3% in the reported quarter compared with 68.1% a year ago. Carload volumes remained flat on a year-over-year basis.
Segment Results
The Chemical & Petroleum segment contributed $122.4 million to revenues, up 6% year over year. Also, volumes improved 8% year over year while revenues per carload declined 2% from the prior-year quarter.
The Industrial & Consumer Products generated revenues of $136.1 million, down 6% year over year. Moreover, business volumes decreased 4% while revenues per carload declined 2% from the prior-year quarter.
The Agriculture & Minerals segment’s revenues totaled $115.1 million, up 10% year over year. On a year-over-year basis, business volumes improved 9% while revenues per carload inched up 1% on a year-over-year basis.
The Energy segment generated $37.2 million in revenues, down 16% year over year. Below par performances of Frac Sand apart from coal & petroleum coke hurt the results at the segment. Business volumes dropped 5% year over year and revenues per carload also deteriorated 12%.
Intermodal revenues were $91.4 million, down 7% year over year. Business volumes dropped 2% while revenues per carload fell 5% year over year.
The Automotive segment accounted for $44.6 million of the total revenue, down 19% year over year. Business volumes were flat while revenues per carload dropped 19%.
Meanwhile, Other revenues totaled $21.7 million, down 8% year over year.
Other notable releases this week
Railroad operators like Canadian Pacific Railway Ltd. (CP - Free Report) and Union Pacific Corp. (UNP - Free Report) are slated to release their second-quarter results on Jul 20 and Jul 21, respectively.
Zacks Rank & A Key Pick
Currently, Kansas City Southern has a Zacks Rank #3 (Hold). A better-ranked stock in the broader transportation space is United Parcel Services Inc. (UPS - Free Report) , carrying a Zacks Rank #2 (Buy).
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Kansas City Southern reported second-quarter 2016 earnings (on an adjusted basis) of $1.22 per share, beating the Zacks Consensus Estimate of $1.04. Earnings also improved 18.4% on a year-over-year basis, thanks to lower costs.
Including special items, the Kansas City, MO-based railroad operator reported earnings of $1.11 per share in the second quarter of 2016, up 10% year over year. Total revenue came in at $569 million, down 3% year over year and also below the Zacks Consensus Estimate of $574 million.
The year-over-year decline can be primarily attributed to a 16% drop in revenues at the Energy segment. The Mexican peso depreciation and lower U.S. fuel prices also hurt results.
In the reported quarter, operating income came in at $220 million, up 18% year over year. Meanwhile, operating ratio (operating expenses as a percentage of revenues) improved to 61.3% in the reported quarter compared with 68.1% a year ago. Carload volumes remained flat on a year-over-year basis.
Segment Results
The Chemical & Petroleum segment contributed $122.4 million to revenues, up 6% year over year. Also, volumes improved 8% year over year while revenues per carload declined 2% from the prior-year quarter.
The Industrial & Consumer Products generated revenues of $136.1 million, down 6% year over year. Moreover, business volumes decreased 4% while revenues per carload declined 2% from the prior-year quarter.
The Agriculture & Minerals segment’s revenues totaled $115.1 million, up 10% year over year. On a year-over-year basis, business volumes improved 9% while revenues per carload inched up 1% on a year-over-year basis.
The Energy segment generated $37.2 million in revenues, down 16% year over year. Below par performances of Frac Sand apart from coal & petroleum coke hurt the results at the segment. Business volumes dropped 5% year over year and revenues per carload also deteriorated 12%.
Intermodal revenues were $91.4 million, down 7% year over year. Business volumes dropped 2% while revenues per carload fell 5% year over year.
The Automotive segment accounted for $44.6 million of the total revenue, down 19% year over year. Business volumes were flat while revenues per carload dropped 19%.
Meanwhile, Other revenues totaled $21.7 million, down 8% year over year.
Other notable releases this week
Railroad operators like Canadian Pacific Railway Ltd. (CP - Free Report) and Union Pacific Corp. (UNP - Free Report) are slated to release their second-quarter results on Jul 20 and Jul 21, respectively.
Zacks Rank & A Key Pick
Currently, Kansas City Southern has a Zacks Rank #3 (Hold). A better-ranked stock in the broader transportation space is United Parcel Services Inc. (UPS - Free Report) , carrying a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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