Zacks Investment Research Downgrades Kansas City Southern (KSU) to Sell

Kansas City Southern (NYSE:KSU) was downgraded by Zacks Investment Research from a “hold” rating to a “sell” rating in a research note issued on Monday.

According to Zacks, “Shares of Kansas City Southern have underperformed its industry in a year's time. High operating expenses are a cause for concern. Increase in fuel costs have contributed to the rise in toatal expenses. High operating expenses have led to the deterioration in operating ratio. Declining revenues at the Energy segment are also worrisome and has the potential to hinder top-line growth in turn. The negativity revolving around the stock is evident from the Zacks Consensus Estimate for current-quarter earnings being revised 1.2% downward in 60 days. Detailed results will be available on Oct 19. However, we are impressed by the company's efforts to reward shareholders through dividend payments and buybacks.”

Several other equities analysts have also weighed in on the stock. Cowen upgraded shares of Kansas City Southern from a “market perform” rating to an “outperform” rating and boosted their target price for the company from $124.00 to $138.00 in a report on Wednesday, August 29th. Raymond James boosted their target price on shares of Kansas City Southern from $128.00 to $133.00 and gave the company a “strong-buy” rating in a report on Friday, August 31st. Morgan Stanley boosted their target price on shares of Kansas City Southern from $106.00 to $108.00 and gave the company a “$111.08” rating in a report on Monday, July 23rd. Loop Capital boosted their target price on shares of Kansas City Southern to $140.00 and gave the company a “buy” rating in a report on Tuesday, August 28th. Finally, Deutsche Bank started coverage on shares of Kansas City Southern in a report on Tuesday, September 4th. They issued a “hold” rating and a $119.00 target price on the stock. One research analyst has rated the stock with a sell rating, four have issued a hold rating, seven have given a buy rating and one has issued a strong buy rating to the stock. Kansas City Southern presently has an average rating of “Buy” and an average price target of $122.43.

Shares of NYSE KSU opened at $114.89 on Monday. The company has a debt-to-equity ratio of 0.54, a current ratio of 1.20 and a quick ratio of 0.85. The stock has a market cap of $11.96 billion, a P/E ratio of 21.98, a price-to-earnings-growth ratio of 1.48 and a beta of 0.83. Kansas City Southern has a 12-month low of $99.47 and a 12-month high of $120.34.

Kansas City Southern (NYSE:KSU) last posted its earnings results on Friday, July 20th. The transportation company reported $1.54 earnings per share for the quarter, beating the consensus estimate of $1.52 by $0.02. The company had revenue of $682.40 million for the quarter, compared to analyst estimates of $686.12 million. Kansas City Southern had a net margin of 36.91% and a return on equity of 12.01%. Kansas City Southern’s revenue was up 4.0% on a year-over-year basis. During the same period in the previous year, the business posted $1.33 EPS. equities analysts forecast that Kansas City Southern will post 6.09 earnings per share for the current year.

In other news, CFO Michael W. Upchurch sold 5,442 shares of the company’s stock in a transaction that occurred on Thursday, July 26th. The shares were sold at an average price of $116.77, for a total value of $635,462.34. Following the transaction, the chief financial officer now directly owns 17,906 shares in the company, valued at approximately $2,090,883.62. The sale was disclosed in a document filed with the SEC, which is accessible through this hyperlink. Also, VP Suzanne M. Grafton sold 729 shares of the company’s stock in a transaction that occurred on Wednesday, August 29th. The stock was sold at an average price of $119.78, for a total transaction of $87,319.62. Following the completion of the transaction, the vice president now owns 10,580 shares in the company, valued at $1,267,272.40. The disclosure for this sale can be found here. Over the last 90 days, insiders sold 7,171 shares of company stock worth $841,712. Company insiders own 0.70% of the company’s stock.

A number of institutional investors have recently added to or reduced their stakes in KSU. Toronto Dominion Bank lifted its holdings in Kansas City Southern by 23.0% during the 1st quarter. Toronto Dominion Bank now owns 58,085 shares of the transportation company’s stock worth $6,379,000 after buying an additional 10,873 shares in the last quarter. IBM Retirement Fund acquired a new stake in Kansas City Southern during the 1st quarter worth approximately $249,000. Norinchukin Bank The lifted its holdings in Kansas City Southern by 14.1% during the 1st quarter. Norinchukin Bank The now owns 9,443 shares of the transportation company’s stock worth $1,037,000 after buying an additional 1,165 shares in the last quarter. Employees Retirement System of Texas lifted its holdings in Kansas City Southern by 54.0% during the 1st quarter. Employees Retirement System of Texas now owns 7,700 shares of the transportation company’s stock worth $846,000 after buying an additional 2,700 shares in the last quarter. Finally, Dimensional Fund Advisors LP lifted its holdings in Kansas City Southern by 1.1% during the 1st quarter. Dimensional Fund Advisors LP now owns 1,423,829 shares of the transportation company’s stock worth $156,408,000 after buying an additional 15,502 shares in the last quarter. Institutional investors own 87.58% of the company’s stock.

About Kansas City Southern

Kansas City Southern, through its subsidiaries, provides domestic and international rail transportation services in North America. It serves a ten-state region in the midwest and southeast regions of the United States and has the shortest north/south rail route between Kansas City, Missouri, and ports along the Gulf of Mexico in Alabama, Louisiana, Mississippi, and Texas.

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