Markets

Kansas City Southern (KSU) Q2 Earnings Top, Revenues Lag

Kansas City SouthernKSU reported second-quarter 2016 earnings (on an adjusted basis) of $1.22 per share, beating the Zacks Consensus Estimate of $1.04. Earnings also improved 18.4% on a year-over-year basis, thanks to lower costs.

Kansas City Southern (KSU) Street Actual & Estimate EPS - Last 5 Quarters | FindTheCompany

Including special items, the Kansas City, MO-based railroad operator reported earnings of $1.11 per share in the second quarter of 2016, up 10% year over year. Total revenue came in at $569 million, down 3% year over year and also below the Zacks Consensus Estimate of $574 million.

The year-over-year decline can be primarily attributed to a 16% drop in revenues at the Energy segment. The Mexican peso depreciation and lower U.S. fuel prices also hurt results.

In the reported quarter, operating income came in at $220 million, up 18% year over year. Meanwhile, operating ratio (operating expenses as a percentage of revenues) improved to 61.3% in the reported quarter compared with 68.1% a year ago. Carload volumes remained flat on a year-over-year basis.

Segment Results

The Chemical & Petroleum segment contributed $122.4 million to revenues, up 6% year over year. Also, volumes improved 8% year over year while revenues per carload declined 2% from the prior-year quarter.

The Industrial & Consumer Products generated revenues of $136.1 million, down 6% year over year. Moreover, business volumes decreased 4% while revenues per carload declined 2% from the prior-year quarter.

The Agriculture & Minerals segment's revenues totaled $115.1 million, up 10% year over year. On a year-over-year basis, business volumes improved 9% while revenues per carload inched up 1% on a year-over-year basis.

The Energy segment generated $37.2 million in revenues, down 16% year over year. Below par performances of Frac Sand apart from coal & petroleum coke hurt the results at the segment. Business volumes dropped 5% year over year and revenues per carload also deteriorated 12%.

Intermodal revenues were $91.4 million, down 7% year over year. Business volumes dropped 2% while revenues per carload fell 5% year over year.

The Automotive segment accounted for $44.6 million of the total revenue, down 19% year over year. Business volumes were flat while revenues per carload dropped 19%.

Meanwhile, Other revenues totaled $21.7 million, down 8% year over year.

KANSAS CITY SOU Price, Consensus and EPS Surprise

KANSAS CITY SOU Price, Consensus and EPS Surprise | KANSAS CITY SOU Quote

Other notable releases this week

Railroad operators like Canadian Pacific Railway Ltd. CP and Union Pacific Corp. UNP are slated to release their second-quarter results on Jul 20 and Jul 21, respectively.

Zacks Rank & A Key Pick

Currently, Kansas City Southern has a Zacks Rank #3 (Hold). A better-ranked stock in the broader transportation space is United Parcel Services Inc. UPS , carrying 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 >>

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 Report

UNION PAC CORP (UNP): Free Stock Analysis Report

CDN PAC RLWY (CP): Free Stock Analysis Report

UTD PARCEL SRVC (UPS): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

CP UNP UPS

Other Topics

Earnings Stocks

Latest Markets Videos

Zacks

Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

Learn More