Kansas City Southern
) reported second-quarter 2014 adjusted earnings of $1.21 per
share, beating the Zacks Consensus Estimate of $1.17. Adjusted
earnings increased 26% from 96 cents in the year-ago quarter on
Total revenue was $649.7 million in the second quarter, up 12%
year over year but below the Zacks Consensus Estimate of $651
million. The year-over-year increase was primarily attributable to
solid revenue growth in the Agriculture and Minerals segment along
with the Automotive segment.
In the second quarter, adjusted operating income was $214
million, up 20% year over year. Adjusted operating ratio was 67%,
reflecting an improvement of 200 basis points year over year.
Segment-wise Quarterly Results
Chemical & Petroleum
segment contributed $115.1 million in revenues, up 6% year over
year. Volume and revenue per carload grew 3% each year over
Industrial & Consumer Products
generated revenues of $156.2 million, up 10% year over year.
Business volume grew 7% year over year. Revenue per carload was up
3% year over year.
Agriculture & Minerals
revenues were $114.9 million, up 33% year over year. Business
volume grew 21% year over year. Revenue per carload also rose 10%
year over year.
segment generated $81.4 million in revenues, down 5% year over
year. Business volume dipped 1% year over year. Revenue per carload
was also down 4% year over year.
revenues were $98.7 million, up 14% year over year. Business volume
and revenue per carload grew 7% each year over year.
segment accounted for $59.6 million of the total revenue, up 25%
year over year. Business volume grew 23% year over year. Revenue
per carload rose 2% year over year.
revenues were $23.8 million, up 8% year over year.
The company exited the quarter with cash and cash equivalents of
$190.2 million compared with $429.5 million in 2013. Long-term debt
decreased to $1,852.4 million from $1,856.9 million in 2013. The
company had free cash flows of $56.2 million at the end of the
second quarter compared with $13.5 million in the same period a
Capital expenditures at the end of the quarter amounted to
$268.0 million compared with $265.9 million at the end of the
second quarter of 2013.
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.
However, we remain cautious on the stock due to competitive
pressure, a unionized workforce, heavy investments and increased
railroad regulation. Additionally, the ongoing uncertainties in
Coal and competition from other carriers like
Canadian National Railway
Norfolk Southern Corp.
Canadian Pacific Railway
) may also pose significant headwinds to the company's growth.
Kansas City Southern retains a Zacks Rank #2 (Buy).
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
KANSAS CITY SOU (KSU): Free Stock Analysis
CDN NATL RY CO (CNI): Free Stock Analysis
NORFOLK SOUTHRN (NSC): Free Stock Analysis
CDN PAC RLWY (CP): Free Stock Analysis Report
To read this article on Zacks.com click here.