Why Is Kansas City Southern (KSU) Up 1.7% Since the Last Earnings Report?
It has been about a month since the last earnings report for Kansas City Southern KSU. Shares have added about 1.7% in that time frame, outperforming the market
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Kansas City Southern Tops Q2 Earnings & Sales Estimates
Kansas City Southern second-quarter 2017 earnings per share of $1.33 beat the Zacks Consensus Estimate of $1.26. The bottom line expanded 9.02% on a year-over-year basis. Results were aided by higher revenues.
The company reported revenues of $656.4 million, which surpassed the Zacks Consensus Estimate of $620.6 million. Revenues improved 15.46% on a year-over-year basis. The results were aided by a 6% rise in overall carload volumes.
In the quarter, operating income increased 9% to $239 million. Kansas City Southern reported operating ratio of 63.5%, reflecting a deterioration of 220 basis points on a year-over-year basis.
Segment Results
The Chemical & Petroleum segment generated revenues of $138.8 million, up 13% year over year. Volumes improved 6% year over year. Revenues per carload also improved 7% from the prior-year quarter.
The Industrial & Consumer Products segment generated revenues of $148.6 million, up 9% year over year. While business volumes increased 4%, revenues per carload climbed 5% year over year.
The Agriculture & Minerals segment revenues totaled $123.4 million, up 7% year over year. While business volumes declined 3%, revenues per carload were up 10%, both on a year-over-year basis.
The Energy segment generated revenues of $70.5 million, up 90% year over year. Impressive performance of Utility Coal boosted the segment’s results. Business volumes improved 41% year over year, while revenues per carload rose 35%.
Intermodal revenues were $90.6 million, down 1% year over year. While business volumes slipped 1%, revenues per carload improved 1% in the reported quarter.
The Automotive segment accounted for $57.5 million of the total revenue, up 29% year over year. While business volumes improved 23%, revenues per carload increased 4%.
Other revenues totaled $27 million, up 24% year over year.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month. There has been one revision higher for the current quarter compared to one lower.
Kansas City Southern Price and Consensus
Kansas City Southern Price and Consensus | Kansas City Southern Quote
VGM Scores
At this time, the stock has a subpar Growth Score of D, though it is doing a bit better on the momentum front with a C. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is more suitable for value investors than momentum based on our style scores.
Outlook
The stock has a Zacks Rank #2 (Buy). We are looking for an above average return from the stock in the next few months.
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