A month has gone by since the last earnings report for Kansas City Southern . Shares have added about 7.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Kansas City Southern due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Kansas City Southern Beats on Earnings in Q4
Kansas City Southern’s earnings (excluding 52 cents from non-recurring items) of $1.82 beat the Zacks Consensus Estimate by a penny. Moreover, the bottom line improved 17% on a year-over-year basis. The year-over-year improvement resulted from a better operational performance.
Quarterly revenues of $729.5 million, however, fell short of the Zacks Consensus Estimate of $738.3 million. However, the top line improved 5.1% on a year-over-year basis, mainly owing to strong performances at the Chemicals and Petroleum and the Agriculture & Minerals units. Overall, carload volumes declined 1% mainly due to weakness in the Automotive and Intermodal segments.
In the reported quarter, operating income (on a reported basis) declined roughly 8% to $236 million. However, operating income (excluding restructuring charges pertaining to Precision Scheduled Railroading initiatives) rose 10.6% to $274.3 million. Kansas City Southern’s adjusted operating ratio (operating expenses as a percentage of revenues) improved to 62.4% from 64.3% a year ago. Lower the value of the metric the better.
Segmental Details
The Chemical & Petroleum segment generated revenues of $186.1 million, up 13% year over year. Volumes expanded 7% year over year. Revenues per carload also climbed 6% from the prior-year quarter.
The Industrial & Consumer Products segment generated revenues of $154.4 million, up 11% year over year. Both business volumes and revenues per carload were up 5% on a year-over-year basis.
The Agriculture & Minerals segment’s total revenues decreased 3% to $127.3 million. While business volumes were up 2%, revenues per carload declined 5% on a year-over-year basis.
The Energy segment’s revenues logged $62.7 million, down 4% year over year. Notably, the positive impact of increased Utility Coal shipments was more than negated by declines in Frac Sand and Crude Oil operations. While business volumes increased 2% year over year, revenues per carload declined 6%.
Intermodal revenues were $97.2 million, down 1% year over year. While business volumes slipped 5%, revenues per carload increased 5% year over year.
Revenues in the Automotive segment increased 4% year over year to $62.3 million. While business volumes fell 6%, revenues per carload climbed 11% on a year-over-year basis.
Other revenues totaled $39.5 million, up 12% year over year.
Outlook
For 2020, volume growth is expected in low single digits. Moreover, the company anticipates mid-single digit revenue growth in 2020. Capital expenditures anticipated to be roughly 17% of revenues in the 2020-2022 period.
Additionally, Kansas City Southern expects 2020 operating ratio in the 60-61% range. The metric is expected to be below 60% in 2021. Moreover, earnings per share is projected to grow at mid-teens CAGR for the 2019-2021 time frame.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month.
VGM Scores
Currently, Kansas City Southern has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Kansas City Southern has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Kansas City Southern (KSU) Up 7.4% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Kansas City Southern . Shares have added about 7.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Kansas City Southern due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Kansas City Southern Beats on Earnings in Q4
Kansas City Southern’s earnings (excluding 52 cents from non-recurring items) of $1.82 beat the Zacks Consensus Estimate by a penny. Moreover, the bottom line improved 17% on a year-over-year basis. The year-over-year improvement resulted from a better operational performance.
Quarterly revenues of $729.5 million, however, fell short of the Zacks Consensus Estimate of $738.3 million. However, the top line improved 5.1% on a year-over-year basis, mainly owing to strong performances at the Chemicals and Petroleum and the Agriculture & Minerals units. Overall, carload volumes declined 1% mainly due to weakness in the Automotive and Intermodal segments.
In the reported quarter, operating income (on a reported basis) declined roughly 8% to $236 million. However, operating income (excluding restructuring charges pertaining to Precision Scheduled Railroading initiatives) rose 10.6% to $274.3 million. Kansas City Southern’s adjusted operating ratio (operating expenses as a percentage of revenues) improved to 62.4% from 64.3% a year ago. Lower the value of the metric the better.
Segmental Details
The Chemical & Petroleum segment generated revenues of $186.1 million, up 13% year over year. Volumes expanded 7% year over year. Revenues per carload also climbed 6% from the prior-year quarter.
The Industrial & Consumer Products segment generated revenues of $154.4 million, up 11% year over year. Both business volumes and revenues per carload were up 5% on a year-over-year basis.
The Agriculture & Minerals segment’s total revenues decreased 3% to $127.3 million. While business volumes were up 2%, revenues per carload declined 5% on a year-over-year basis.
The Energy segment’s revenues logged $62.7 million, down 4% year over year. Notably, the positive impact of increased Utility Coal shipments was more than negated by declines in Frac Sand and Crude Oil operations. While business volumes increased 2% year over year, revenues per carload declined 6%.
Intermodal revenues were $97.2 million, down 1% year over year. While business volumes slipped 5%, revenues per carload increased 5% year over year.
Revenues in the Automotive segment increased 4% year over year to $62.3 million. While business volumes fell 6%, revenues per carload climbed 11% on a year-over-year basis.
Other revenues totaled $39.5 million, up 12% year over year.
Outlook
For 2020, volume growth is expected in low single digits. Moreover, the company anticipates mid-single digit revenue growth in 2020. Capital expenditures anticipated to be roughly 17% of revenues in the 2020-2022 period.
Additionally, Kansas City Southern expects 2020 operating ratio in the 60-61% range. The metric is expected to be below 60% in 2021. Moreover, earnings per share is projected to grow at mid-teens CAGR for the 2019-2021 time frame.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month.
VGM Scores
Currently, Kansas City Southern has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Kansas City Southern has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.