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Kansas City Southern (KSU) Q3 Earnings Miss, Decline Y/Y

Zacks

Kansas City Southern KSU reported third-quarter 2016 earnings (on an adjusted basis) of $1.12 per share that missed the Zacks Consensus Estimate of $1.20. The bottom line also declined 7% year over year.

Total revenue dipped 4% year over year to $604.5 million but surpassed the Zacks Consensus Estimate of $601.4 million.

The year-over-year decline can be primarily attributed to a 15% drop in revenues at the Energy segment. Other challenges like floods, outages and service disruption in the company’s Mexico unit also contributed to the downside. The Mexican peso depreciation and lower U.S. fuel prices also hurt results.

In the reported quarter, operating income came in at $220 million, down 9% year over year. Operating ratio (operating expenses as a percentage of revenues) deteriorated to 66.9% in the reported quarter from 65.2% a year ago. Carload volumes declined 4% on a year-over-year basis.


Segment Results

The Chemical & Petroleum segment generated revenues of $124.3 million, up 1% year over year. However, volumes deteriorated 4% year over year. Revenues per carload improved 5% from the prior-year quarter.

The Industrial & Consumer Products generated revenues of $140.5 million, down 6% year over year. Business volumes decreased 6%, whereas revenues per carload slipped 1% from the prior-year quarter.

The Agriculture & Minerals segment revenues totaled $113.4 million, up 3% year over year. Business volumes were down 1%, whereas revenues per carload were up 4%, both on a year-over-year basis.

The Energy segment generated revenues of $62.8 million, down 15% year over year. Below par performances of Frac Sand and crude oil hurt the segment’s results. Business volumes dropped 7% year over year, while revenues per carload deteriorated 8%.

Intermodal revenues were $88.6 million, down 7% year over year. Business volumes dropped 5%, while revenues per carload fell 2% year over year.

The Automotive segment accounted for $51.4 million of the total revenue, down 6% year over year. Business volumes improved 14%, whereas revenues per carload plunged 18%.

Other revenues totaled $23.5 million, down 4% year over year.

KANSAS CITY SOU Price, Consensus and EPS Surprise

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

The Zacks Ranks #3 (Hold) company continues to face stiff competition from other U.S. railroads such as Norfolk Southern Corp. NSC, CSX Corp. CSX and Union Pacific Corp. UNP. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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