Kansas City Southern Earnings Preview

Before you go, we thought you'd like these...
Before you go close icon

Kansas City Southern (NYS: KSU) will try to beat its earnings estimates for the third consecutive quarter. The company will unveil its latest earnings on Tuesday. Kansas City Southern is engaged in domestic and international rail operations in North America that are focused on the growing north/south freight corridor connecting commercial and industrial markets in the central U.S.

What analysts say:

  • Buy, sell, or hold?: Analysts strongly back Kansas City Southern, with nine of 14 rating it a buy and the remainder rating it a hold. Analysts like Kansas City Southern better than competitor Canadian Pacific Railway Limited overall. While analysts still rate the stock a moderate buy, they are a little more optimistic about it compared to three months ago.
  • Revenue forecasts: On average, analysts predict $543.2 million in revenue this quarter. That would represent a rise of 11.2% from the year-ago quarter.
  • Wall Street earnings expectations: The average analyst estimate is earnings of $0.73 per share. Estimates range from $0.70 to $0.79.

What our community says:
CAPS All-Stars are solidly backing the stock, with 97% awarding it an outperform rating. The community at large concurs with the All Stars, with 96.1% granting it a rating of outperform. Even with a robust four out of five stars, Kansas City Southern's CAPS rating falls a little short of the community's upbeat outlook.


Management:
Kansas City Southern's profit has risen year-over-year by an average of 83.6% over the past five quarters. The company upped its gross margin by 4.1 percentage points in the last quarter. Revenue rose 10.8% while cost of sales rose 1% to $223.1 million from a year earlier.

Now let's get some insight into how efficient management is at running the business. Margins illustrate how efficiently a company captures portions of sales dollars. The company's net margins have been increasing year-over-year for the last four quarters. Net margins reflect what percentage of revenue becomes profit. Here are Kansas City Southern's reported margins for the last four quarters:

Quarter

Q4

Q3

Q2

Q1

Gross Margin

57.9%

57.6%

56.4%

56.1%

Operating Margin

28.4%

33.4%

28.3%

26.2%

Net Margin

18.0%

18.3%

13.2%

13.1%

For all our Kansas City Southern-specific analysis, including earnings and beyond, add Kansas City Southern to My Watchlist.

The Motley Fool has a disclosure policy.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Earnings estimates provided by Zacks.

At the time this article was published

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners