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Kansas City Southern Increases Sales but Misses Estimates on Earnings

By Seth Jayson – Updated Apr 7, 2017 at 12:17PM

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Just the facts, Fool.

Kansas City Southern (NYSE: KSU) reported earnings on Oct. 19. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Sep. 30 (Q3), Kansas City Southern met expectations on revenues and missed estimates on earnings per share.

Compared to the prior-year quarter, revenue expanded and GAAP earnings per share dropped.

Gross margins grew, operating margins increased, net margins contracted.

Revenue details
Kansas City Southern tallied revenue of $577.4 million. The 17 analysts polled by S&P Capital IQ hoped for sales of $577.8 million on the same basis. GAAP reported sales were 6.0% higher than the prior-year quarter's $544.5 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.82. The 20 earnings estimates compiled by S&P Capital IQ predicted $0.85 per share. GAAP EPS of $0.82 for Q3 were 9.9% lower than the prior-year quarter's $0.91 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 39.9%, 240 basis points better than the prior-year quarter. Operating margin was 31.3%, 260 basis points better than the prior-year quarter. Net margin was 15.6%, 270 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $573.4 million. On the bottom line, the average EPS estimate is $0.88.

Next year's average estimate for revenue is $2.25 billion. The average EPS estimate is $3.29.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 432 members out of 447 rating the stock outperform, and 15 members rating it underperform. Among 100 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 99 give Kansas City Southern a green thumbs-up, and one 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 $80.94.

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 of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool has no positions in the stocks mentioned above. 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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