Zacks Investment Research Lowers Kansas City Southern (KSU) to Hold

Kansas City Southern (NYSE:KSU) was downgraded by Zacks Investment Research from a “buy” rating to a “hold” rating in a report released on Tuesday.

According to Zacks, “Kansas City Southern's shares comfortably outperformed the industry it belongs to. The stock has gained 19.2%, as against the industry’s decline of 0.1% in the last three months. The stock, however, lags its fellow railroad operator, Norfolk Southern that saw a gain of 3.6% in the last three months. The improving scenario with respect to coal is aiding Kansas City Southern significantly. We are also bullish on the company's efforts to reward shareholders dividend payments and buybacks. In line with this objective, the company recently hiked its quarterly dividend in excess of 9%. Moreover, its board cleared a new share repurchase program worth $800 million.  Sluggish intermodal revenues and high fuel costs, however, remain concerns.”

Several other brokerages have also recently issued reports on KSU. BidaskClub raised shares of Kansas City Southern from a “buy” rating to a “strong-buy” rating in a report on Friday. Stifel Nicolaus reaffirmed a “buy” rating and issued a $118.00 target price (up from $114.00) on shares of Kansas City Southern in a report on Friday. Bank of America Corporation lifted their target price on shares of Kansas City Southern from $112.00 to $113.00 and gave the stock a “neutral” rating in a report on Monday. UBS AG reaffirmed a “positive” rating and issued a $117.00 target price (up from $103.00) on shares of Kansas City Southern in a report on Monday, July 24th. Finally, BMO Capital Markets reiterated a “market perform” rating and issued a $105.00 price target (up from $98.00) on shares of Kansas City Southern in a research note on Tuesday, July 25th. Eleven analysts have rated the stock with a hold rating, eight have issued a buy rating and one has given a strong buy rating to the company. The stock currently has a consensus rating of “Buy” and an average target price of $104.60.

Shares of Kansas City Southern (KSU) opened at 108.08 on Tuesday. Kansas City Southern has a 52 week low of $79.05 and a 52 week high of $109.13. The company has a market cap of $11.39 billion, a PE ratio of 21.75 and a beta of 0.80. The company has a 50 day moving average of $104.14 and a 200 day moving average of $94.27.

Kansas City Southern (NYSE:KSU) last issued its earnings results on Friday, July 21st. The transportation company reported $1.33 earnings per share (EPS) for the quarter, topping the consensus estimate of $1.26 by $0.07. The business had revenue of $656.40 million during the quarter, compared to analysts’ expectations of $627.81 million. Kansas City Southern had a net margin of 21.52% and a return on equity of 11.40%. The business’s revenue for the quarter was up 15.5% compared to the same quarter last year. During the same period in the previous year, the company earned $1.22 earnings per share. On average, analysts expect that Kansas City Southern will post $5.21 EPS for the current year.

Kansas City Southern announced that its board has initiated a share buyback plan on Tuesday, August 15th that allows the company to buyback $800.00 million in outstanding shares. This buyback authorization allows the transportation company to reacquire up to 7.1% of its shares through open market purchases. Shares buyback plans are typically an indication that the company’s leadership believes its shares are undervalued.

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In other Kansas City Southern news, Director Henry J. Maier purchased 3,000 shares of the firm’s stock in a transaction that occurred on Thursday, August 17th. The shares were bought at an average price of $106.19 per share, with a total value of $318,570.00. Following the completion of the purchase, the director now directly owns 4,159 shares in the company, valued at $441,644.21. The transaction was disclosed in a legal filing with the Securities & Exchange Commission, which is accessible through this hyperlink. Also, SVP Mary K. Stadler sold 4,451 shares of the company’s stock in a transaction on Friday, August 18th. The shares were sold at an average price of $105.87, for a total transaction of $471,227.37. Following the sale, the senior vice president now directly owns 8,814 shares in the company, valued at approximately $933,138.18. The disclosure for this sale can be found here. 0.95% of the stock is owned by corporate insiders.

Large investors have recently added to or reduced their stakes in the stock. QS Investors LLC increased its stake in Kansas City Southern by 0.5% in the second quarter. QS Investors LLC now owns 1,320 shares of the transportation company’s stock worth $138,000 after buying an additional 7 shares during the last quarter. Savant Capital LLC increased its stake in Kansas City Southern by 0.4% in the first quarter. Savant Capital LLC now owns 3,201 shares of the transportation company’s stock worth $275,000 after buying an additional 12 shares during the last quarter. Concert Wealth Management Inc. increased its stake in Kansas City Southern by 0.3% in the first quarter. Concert Wealth Management Inc. now owns 7,059 shares of the transportation company’s stock worth $598,000 after buying an additional 24 shares during the last quarter. Moors & Cabot Inc. increased its stake in Kansas City Southern by 1.2% in the second quarter. Moors & Cabot Inc. now owns 4,277 shares of the transportation company’s stock worth $447,000 after buying an additional 51 shares during the last quarter. Finally, Envestnet Asset Management Inc. increased its stake in Kansas City Southern by 2.4% in the first quarter. Envestnet Asset Management Inc. now owns 2,250 shares of the transportation company’s stock worth $194,000 after buying an additional 52 shares during the last quarter. 85.05% of the stock is currently owned by institutional investors.

Kansas City Southern Company Profile

Kansas City Southern (KCS) is a holding company. The Company has domestic and international rail operations in North America that are focused on the north/south freight corridor connecting commercial and industrial markets in the central United States with industrial cities in Mexico. The Company’s subsidiaries include The Kansas City Southern Railway Company (KCSR) and Kansas City Southern de Mexico, SA de C.V.

Analyst Recommendations for Kansas City Southern (NYSE:KSU)

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