Why Kansas City Southern, International Game Technology, and First Niagara Financial Tumbled Today

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

Stock market investors got a nasty surprise on Friday, as major-market benchmarks dropped 2% on rising concerns about emerging-market economies. Yet, even the general fear in the market wasn't enough to fully explain the much larger drops that Kansas City Southern (NYSE: KSU  ) , International Game Technology (NYSE: IGT  ) , and First Niagara Financial (NASDAQ: FNFG  ) suffered today.

Kansas City Southern sank 15% after the railroad posted earnings and revenue growth that fell short of what investors had hoped to see. A rise of 8.3% in sales on a 24% bump in net income seemed solid, especially as an 18% rise in intermodal revenue was able to overcome a plunge in coal revenue, which was down 24% from year-ago levels. But a $0.07 per share shortfall on its earnings-per-share results left Kansas City Southern shareholders feeling uncomfortable with the rich valuations on the railroad stock, and they therefore retreated to produce more margin of safety for future quarters.

International Game Technology also dropped 15% on a poor quarterly report, with revenue rising just 2%, and earnings per share missing estimates by $0.05. Moreover, the gaming-equipment company guided adjusted earnings estimates for the fiscal 2014 year down to the lower end of its previous range. Unlike Kansas City Southern, though, International Game Technology's valuations leave much more room for value investors to bet on a turnaround.

First Niagara Financial fell 12% as the regional bank gave poor guidance for the full fiscal year. The company saw modest growth in loans and deposits, and nonperforming loans stayed at relatively low levels. But the real question is whether First Niagara will be able to finally get the full value of the nearly 200 bank branches it bought from HSBC (NYSE: HSBC  ) back in 2012. With challenging economic conditions in the bank's Northeast region, though, it's understandable that First Niagara is taking longer than shareholders would like to reap the benefits of that acquisition.

The banking opportunity you shouldn't miss
Do you hate your bank? If you're like most Americans, chances are good that you answered yes to that question. While that's not great news for consumers, it certainly creates opportunity for savvy investors. That's because there's a brand-new company that's revolutionizing banking, and it's poised to kill the hated traditional brick-and-mortar banking model. And, amazingly, despite its rapid growth, this company is still flying under the radar of Wall Street. For the name and details on this company, click here to access our new special free report.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2809051, ~/Articles/ArticleHandler.aspx, 12/18/2014 2:22:58 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement