Kansas City Southern Beats Estimates Yet Again

Seth Jayson, The Motley Fool
Updated

Kansas City Southern (NYS: KSU) reported earnings on Jan. 23. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), Kansas City Southern missed on revenues and crushed expectations on earnings per share.

Compared to the prior-year quarter, revenue increased, and earnings per share grew significantly.

Margins expanded across the board.

Revenue details
Kansas City Southern reported revenue of $530 million. The 13 analysts polled by S&P Capital IQ predicted net sales of $549 million. Sales were 11% higher than the prior-year quarter's $479 million

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Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions.

EPS details
Non-GAAP EPS came in at $1.01. The 18 earnings estimates compiled by S&P Capital IQ averaged $0.79 per share on the same basis. GAAP EPS of $0.87 for Q4 were 75% higher than the prior-year quarter's $0.50 per share.

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Source: S&P Capital IQ. Quarterly periods. Figures may be non-GAAP to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 57.9%, 2,000 basis points better than the prior-year quarter. Operating margin was 28.4%, 20 basis points better than the prior-year quarter. Net margin was 18.0%, 660 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $549 million. On the bottom line, the average EPS estimate is $0.74.

Next year's average estimate for revenue is $2.4 billion. The average EPS estimate is $3.49.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 407 members out of 423 rating the stock outperform, and 16 members rating it underperform. Among 108 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 106 give Kansas City Southern a green thumbs-up, and two give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Kansas City Southern is outperform, with an average price target of $69.50.

At the time thisarticle was published Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. 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.

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