) reported fourth quarter 2012 adjusted earnings of 92 cents per
share, breezing past the Zacks Consensus Estimate of 83 cents.
Adjusted earnings increased 19.5% from 77 cents in the year-ago
quarter driven by higher freight rates and volumes.
Adjusted earnings for the fourth quarter excluded the impact
of 9 cents per share of unfavorable special items related to
income tax, adjustment for debt retirement costs and foreign
For the full year, earnings per share rose 14.3% year over
year to $3.43.
Quarterly total revenues were $568.4 million in the fourth
quarter, up 7.2% year over year and in line with the Zacks
Consensus Estimate. The year-over-year increase was primarily
attributable to a 2% growth in carloads. For full-year 2012,
revenues were $2.2 billion, up 6.7% year over year. Carloads
registered an increase of 5% year over year.
In the fourth quarter, operating income was $173.6 million, up
15.4% year over year. This resulted in an operating ratio of
69.5%, up 210 basis points year over year. Operating income for
2012, increased 14.8% year over year to $672.9 million.
Operating ratio for the year was 69.9%, which improved 220 basis
points year over year.
Segment Wise Quarterly Results
Chemical & Petroleum
segment contributed $104 million in revenues, up 14% year over
year. Volume was 6,160, up 5% year over year. Revenue per unit
came in at $1,688, up 8% year over year.
Industrial & Consumer Products
generated revenues of $137.3 million, up 11% year over year.
Business volume was 81,900, up 6% year over year. Revenue per
carload was $1,676, up 5% year over year.
Agriculture & Minerals
segment revenues were $91.9 million, down 11% year over year.
Business volume was 50,800, down 14% year over year. Revenue per
carload was $1,809, up 3% year over year.
segment generated $84.6 million in revenues, down 1% year over
year. Business volume was 74,100, down 11% year over year.
Revenue per carload was $1,142, up 11% year over year.
segment revenues were $80.0 million, up 14% year over year.
Business volume was 234,800, up 7% year over year. Revenue per
carload was $341, up 8% year over year.
segment accounted for $49.1 million revenues, up 33% year over
year. Business volume was 28,500, up 21% year over year. Revenue
per carload was $1,723, up 10% year over year.
revenues were $21.5 million, up 8% year over year.
The company exited 2012 with cash and cash equivalents of
$72.6 million compared with $72.4 million in 2011. Long-term debt
increased to $1,547.6 million from $1,602.8 million in 2011.
The company had free cash flows of $35.2 million at the
year-end 2012 compared with $174.6 million in 2011.
Capital expenditures for the year amounted to $540 million
compared with $495 million a year ago.
Other Railroad Stocks
Over this week, we expect fourth quarter results from another
railroad company -
Union Pacific Corporation
). The company is slated to release its earnings on Jan 24, 2013.
The Zacks Consensus Estimates for the fourth quarter and 2012
earnings currently stand at $2.16 per share and $8.25 per share,
respectively. The estimates reflect a respective year-over-year
growth of 8.7% and 22.7% for the fourth quarter and 2012.
Other stocks worth considering within the sector are
Genesee & Wyoming
) that holds a Zacks Rank #1 (Strong Buy) and
American Railcar Industries
) that carries a Zacks Rank #2 (Buy).
We believe Kansas City Southern remains well positioned to
reap benefits from the ongoing strong pricing trend. The
company's productivity initiatives and efficient cost control
measures are expected to drive operating performance over the
long term. Further, strategic investments in infrastructural
development will ensure the achievement of growth goals of the
However, we remain cautious on the stock due to competitive
pressures, a unionized workforce, heavy investments and increased
railroad regulation. Additionally, the ongoing uncertainties in
the coal and agriculture industries and a competitive market may
also pose significant headwinds for the company.
Kansas City Southern retains a Zacks Rank #4 (Sell).
AMER RAILCAR (ARII): Free Stock Analysis
GENESEE & WYO (GWR): Free Stock Analysis
KANSAS CITY SOU (KSU): Free Stock Analysis
UNION PAC CORP (UNP): Free Stock Analysis
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