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.
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.
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
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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).