U.S. markets closed
  • S&P 500

    3,811.15
    -18.19 (-0.48%)
     
  • Dow 30

    30,932.37
    -469.64 (-1.50%)
     
  • Nasdaq

    13,192.35
    +72.92 (+0.56%)
     
  • Russell 2000

    2,201.05
    +0.88 (+0.04%)
     
  • Crude Oil

    61.66
    -1.87 (-2.94%)
     
  • Gold

    1,733.00
    -42.40 (-2.39%)
     
  • Silver

    26.70
    -0.98 (-3.56%)
     
  • EUR/USD

    1.2088
    -0.0099 (-0.81%)
     
  • 10-Yr Bond

    1.4600
    -0.0580 (-3.82%)
     
  • GBP/USD

    1.3922
    -0.0091 (-0.65%)
     
  • USD/JPY

    106.5500
    +0.3200 (+0.30%)
     
  • BTC-USD

    45,824.68
    +262.32 (+0.58%)
     
  • CMC Crypto 200

    912.88
    -20.25 (-2.17%)
     
  • FTSE 100

    6,483.43
    -168.53 (-2.53%)
     
  • Nikkei 225

    28,966.01
    -1,202.26 (-3.99%)
     

Is a Beat Likely for Kansas City Southern (KSU) Q3 Earnings?

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
Zacks Equity Research
·4 min read
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

Kansas City Southern KSU is scheduled to report third-quarter 2020 earnings on Oct 16, before market open.

The Zacks Consensus Estimate for the company’s third-quarter earnings has been revised upward by 5.9% in the last 60 days. Moreover, the company has an impressive earnings history, having outperformed the Zacks Consensus Estimate in each of the trailing four quarters, with an average beat of 7%.

Let’s see whether the company is able to repeat its success story in the September quarter as well.

Factors to Note

Kansas City Southern’s third-quarter performance is expected to have benefited from reduced costs and increased efficiency owing to the precision-scheduled railroading model.
 
While the company saw improvement in volumes in the third quarter with the ramping up of economic activities, it was still significantly below year-ago levels. At the Cowen 2020 global transportation and sustainable mobility conference, it stated that its revenues and volumes were down roughly 14% and 6%, respectively, quarter to date (as of Sep 7, 2020). This softness in volumes due to coronavirus concerns is likely to have hurt Kansas City Southern’s top line. The Zacks Consensus Estimate for third-quarter revenues indicates a 10.2% fall from the year-ago reported figure.

Volumes are expected to have been especially low in the industrial and consumer business unit due to significant weakness in the company’s metals business despite gradual recovery in the economy. This anticipated weakness in volumes is likely to get reflected in Industrial and Consumer Products revenues. The consensus mark for Industrial and Consumer Products revenues suggests a 10.2% decline from third-quarter 2019 reported figure.

Low crude shipments are also expected to have weighed on the company’s energy business. The Zacks Consensus Estimate for Energy revenues hints at a 16.9% fall from the year-ago reported figure.

Kansas City Southern Price and EPS Surprise

 

Kansas City Southern Price and EPS Surprise
Kansas City Southern Price and EPS Surprise

Kansas City Southern price-eps-surprise | Kansas City Southern Quote

Earnings Whispers

The proven Zacks model predicts an earnings beat for Kansas City Southern in the third quarter of 2020. This is because the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: Kansas City Southern has an Earnings ESP of +1.91% as the Most Accurate Estimate is pegged at $1.83, higher than the Zacks Consensus Estimate of $1.79. 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.

Highlights of Q2 Earnings

In the last-reported quarter, the company delivered an earnings surprise of 2.7%. However, the bottom line declined approximately 30% year over year due to decline in demand as a result of coronavirus. Meanwhile, quarterly revenues lagged the Zacks Consensus Estimate and also fell 23% year over year due to weak volumes.

Other Stocks to Consider

Investors interested in the broader Transportation sector may also consider C.H. Robinson Worldwide Inc CHRW), Canadian National Railway Company CNI and J.B. Hunt Transport Services Inc JBHT as these stocks too possess the right combination of elements to beat on earnings this reporting cycle.

C.H. Robinson has an Earnings ESP of +3.45% and a Zacks Rank of 2. The company will release third-quarter earnings numbers on Oct 27.

Canadian National has an Earnings ESP of +2.99% and a Zacks Rank #3. The company will announce third-quarter results on Oct 20.

J.B. Hunt has an Earnings ESP of +5.16% and a Zacks Rank #2. The company is set to release third-quarter financial numbers on Oct 16.

Just Released: Zacks’ 7 Best Stocks for Today

Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.3% per year.

These 7 were selected because of their superior potential for immediate breakout.

See these time-sensitive tickers now >>


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
 
Canadian National Railway Company (CNI) : Free Stock Analysis Report
 
Kansas City Southern (KSU) : Free Stock Analysis Report
 
Citigroup Inc. (C) : Free Stock Analysis Report
 
J.B. Hunt Transport Services, Inc. (JBHT) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.