Shares of Kansas City Southern have declined 9.2% in a year against the industry’s 16.2% rise.
Reasons Behind the Price Fall
The company has been grappling with high operating expenses for quite some time. Operating expenses increased 4.2% in the first nine months of 2018, mainly due to a 9.2% rise in fuel costs. High operating expenses unless controlled has potential to limit bottom-line growth going forward. Congestion in the U.S. rail network is another cause for concern.
Moreover, declining revenues at the Energy segment might hinder top-line growth. Notably, revenues at the segment dropped 11% year over year during the first nine months of the year.
The company’s struggles on the top- and the bottom-line front can be traced from third-quarter 2018 earnings report wherein it delivered lower-than-expected earnings and revenues.
Further, the company’s trailing 12-month return on equity (ROE) undercuts its growth potential. Its 12% ROE compares unfavorably with the ROE of 21.9% for its industry and 18.1% for the S&P 500 index.
The negativity surrounding the stock is evident from the Zacks Consensus Estimate for current-quarter earnings being revised 3.1% downward in the last 60 days. Also, the same for full-year earnings has been moved 1.3% south over the given time frame.
The company’s VGM Score of D also highlights its sluggish growth prospects. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of all three factors.
Zacks Rank & Key Picks
Kansas City Southern carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader Transportation sector are Air France-KLM (AFLYY - Free Report) , CSX Corporation (CSX - Free Report) and Norfolk Southern Corporation (NSC - Free Report) . While Air France-KLM and CSX sport a Zacks Rank #1 (Strong Buy), Norfolk Southern holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of Air France-KLM have surged more than 32% in the past six months while CSX and Norfolk Southern stocks have rallied more than 12%.
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Shares of Kansas City Southern have declined 9.2% in a year against the industry’s 16.2% rise.
Reasons Behind the Price Fall
The company has been grappling with high operating expenses for quite some time. Operating expenses increased 4.2% in the first nine months of 2018, mainly due to a 9.2% rise in fuel costs. High operating expenses unless controlled has potential to limit bottom-line growth going forward. Congestion in the U.S. rail network is another cause for concern.
Moreover, declining revenues at the Energy segment might hinder top-line growth. Notably, revenues at the segment dropped 11% year over year during the first nine months of the year.
The company’s struggles on the top- and the bottom-line front can be traced from third-quarter 2018 earnings report wherein it delivered lower-than-expected earnings and revenues.
Further, the company’s trailing 12-month return on equity (ROE) undercuts its growth potential. Its 12% ROE compares unfavorably with the ROE of 21.9% for its industry and 18.1% for the S&P 500 index.
The negativity surrounding the stock is evident from the Zacks Consensus Estimate for current-quarter earnings being revised 3.1% downward in the last 60 days. Also, the same for full-year earnings has been moved 1.3% south over the given time frame.
The company’s VGM Score of D also highlights its sluggish growth prospects. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of all three factors.
Zacks Rank & Key Picks
Kansas City Southern carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader Transportation sector are Air France-KLM (AFLYY - Free Report) , CSX Corporation (CSX - Free Report) and Norfolk Southern Corporation (NSC - Free Report) . While Air France-KLM and CSX sport a Zacks Rank #1 (Strong Buy), Norfolk Southern holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of Air France-KLM have surged more than 32% in the past six months while CSX and Norfolk Southern stocks have rallied more than 12%.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>
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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