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Kansas City Southern's (KSU) Q3 Earnings Miss, Rise Y/Y

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Kansas City Southern’s (KSU - Free Report) third-quarter 2018 earnings (excluding 13 cents from non-recurring items) of $1.57 fell short of the Zacks Consensus Estimate of $1.58 per share. The bottom line, however, expanded 16.3% on a year-over-year basis.

The company reported revenues of $699 million, which fell short of the Zacks Consensus Estimate of $707.1 million. However, the top line improved 6.5% on a year-over-year basis. The year over year revenue growth was due to a 4% rise in overall carload volumes.

In the quarter, adjusted operating income increased 9% to $256 million. Kansas City Southern’s operating ratio (operating expenses as a percentage of revenues) was 63.4% compared with 64.4% reported a year ago. Improvement in this key metric is a positive for the company.

Kansas City Southern Price, Consensus and EPS Surprise

 

Kansas City Southern Price, Consensus and EPS Surprise | Kansas City Southern Quote

Segment Results

The Chemical & Petroleum segment generated revenues of $160.6 million, up 17% year over year. Volumes improved 15% year over year. Revenues per carload also improved 2% from the prior-year quarter.

The Industrial & Consumer Products segment generated revenues of $152.5 million, flat year over year. While business volumes decreased 1%, revenues per carload increased 1% year over year.

The Agriculture & Minerals segment’s total revenue was $116.2 million, flat year over year. While business volumes declined 2%, revenues per carload were up 2% both on a year-over-year basis.

The Energy segment generated revenues of $73.2 million, down 2% year over year. Disappointing performances at the Utility Coal and Frac Sand units hurt the segment’s results. While business volumes decreased 8% year over year, revenues per carload rose 7%.

Intermodal revenues were $100 million, up 8% year over year. While business volumes improved 7%, revenues per carload increased 1% in the reported quarter.

Revenues at the Automotive segment came in at $66.2 million, up 8% year over year. Both business volumes and revenues per carload increased 4% on a year-over-year basis.

Other revenues totaled $30.3 million, up 32% year over year.

Zacks Rank

Kansas City Southern carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Releases

Investors interested in the railroad space also keenly await third-quarter earnings reports from key players like Canadian National Railway Co. (CNI - Free Report) , Norfolk Southern Corp. (NSC - Free Report) and Genesee & Wyoming Inc. (GWR - Free Report) in the coming days. While Canadian National and Norfolk Southern are scheduled to report on Oct 23 and Oct 24, respectively, Genesee & Wyoming will report on Nov 9.

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