NYSE:KSU

Stock Analysis Report

Executive Summary

Kansas City Southern, a transportation holding company, provides domestic and international rail transportation services in North America.


Snowflake Analysis

Mediocre balance sheet with limited growth.


Similar Companies

Share Price & News

How has Kansas City Southern's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: KSU has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

1.7%

KSU

-0.9%

US Transportation

0.5%

US Market


1 Year Return

57.8%

KSU

11.6%

US Transportation

20.3%

US Market

Return vs Industry: KSU exceeded the US Transportation industry which returned 11.6% over the past year.

Return vs Market: KSU exceeded the US Market which returned 20.3% over the past year.


Shareholder returns

KSUIndustryMarket
7 Day1.7%-0.9%0.5%
30 Day6.6%3.8%2.0%
90 Day16.1%10.5%9.4%
1 Year59.7%57.8%13.7%11.6%22.8%20.3%
3 Year109.8%101.8%65.1%57.1%50.1%40.4%
5 Year61.3%50.7%64.9%32.1%73.1%54.1%

Price Volatility Vs. Market

How volatile is Kansas City Southern's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Kansas City Southern undervalued compared to its fair value and its price relative to the market?

32.52x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: KSU ($176.39) is trading above our estimate of fair value ($131.75)

Significantly Below Fair Value: KSU is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: KSU is poor value based on its PE Ratio (32.5x) compared to the Transportation industry average (22.1x).

PE vs Market: KSU is poor value based on its PE Ratio (32.5x) compared to the US market (18.3x).


Price to Earnings Growth Ratio

PEG Ratio: KSU is poor value based on its PEG Ratio (2.1x)


Price to Book Ratio

PB vs Industry: KSU is overvalued based on its PB Ratio (3.8x) compared to the US Transportation industry average (2.4x).


Next Steps

Future Growth

How is Kansas City Southern forecast to perform in the next 1 to 3 years based on estimates from 17 analysts?

15.6%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: KSU's forecast earnings growth (15.6% per year) is above the savings rate (1.7%).

Earnings vs Market: KSU's earnings (15.6% per year) are forecast to grow faster than the US market (14.2% per year).

High Growth Earnings: KSU's earnings are forecast to grow, but not significantly.

Revenue vs Market: KSU's revenue (4.9% per year) is forecast to grow slower than the US market (7.6% per year).

High Growth Revenue: KSU's revenue (4.9% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: KSU's Return on Equity is forecast to be low in 3 years time (16.6%).


Next Steps

Past Performance

How has Kansas City Southern performed over the past 5 years?

8.5%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: KSU has high quality earnings.

Growing Profit Margin: KSU's current net profit margins (18.8%) are lower than last year (23.1%).


Past Earnings Growth Analysis

Earnings Trend: KSU's earnings have grown by 8.5% per year over the past 5 years.

Accelerating Growth: KSU's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: KSU had negative earnings growth (-14.1%) over the past year, making it difficult to compare to the Transportation industry average (-14.1%).


Return on Equity

High ROE: KSU's Return on Equity (11.4%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Kansas City Southern's financial position?


Financial Position Analysis

Short Term Liabilities: KSU's short term assets ($728.6M) exceed its short term liabilities ($491.3M).

Long Term Liabilities: KSU's short term assets ($728.6M) do not cover its long term liabilities ($4.5B).


Debt to Equity History and Analysis

Debt Level: KSU's debt to equity ratio (68.2%) is considered high.

Reducing Debt: KSU's debt to equity ratio has increased from 56.6% to 68.2% over the past 5 years.

Debt Coverage: KSU's debt is well covered by operating cash flow (34.1%).

Interest Coverage: KSU's interest payments on its debt are well covered by EBIT (9.1x coverage).


Balance Sheet

Inventory Level: KSU has a high level of physical assets or inventory.

Debt Coverage by Assets: KSU's debt is not covered by short term assets (assets are 0.2x debt).


Next Steps

Dividend

What is Kansas City Southern's current dividend yield, its reliability and sustainability?

0.91%

Current Dividend Yield


Upcoming Dividend Payment

Purchase Kansas City Southern before the 'Buy Limit' to receive their next dividend payment.


Dividend Yield vs Market

company0.9%marketbottom25%1.4%markettop25%3.7%industryaverage1.6%forecastin3Years0.9%

Current dividend yield vs market & industry

Notable Dividend: KSU's dividend (0.91%) isn’t notable compared to the bottom 25% of dividend payers in the US market (1.44%).

High Dividend: KSU's dividend (0.91%) is low compared to the top 25% of dividend payers in the US market (3.73%).


Stability and Growth of Payments

Stable Dividend: Whilst dividend payments have been stable, KSU has been paying a dividend for less than 10 years.

Growing Dividend: KSU's dividend payments have increased, but the company has only paid a dividend for 8 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (27.3%), KSU's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: KSU's dividends in 3 years are forecast to be well covered by earnings (16.6% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

2.4yrs

Average management tenure


CEO

Pat Ottensmeyer (61yo)

3.6yrs

Tenure

US$5,523,327

Compensation

Mr. Patrick J. Ottensmeyer, also known as Pat, has been the President of Kansas City Southern since March 1, 2015 and its Chief Executive Officer and director since July 1, 2016. Mr. Ottensmeyer served as  ...


CEO Compensation Analysis

Compensation vs Market: Pat's total compensation ($USD5.52M) is below average for companies of similar size in the US market ($USD10.78M).

Compensation vs Earnings: Pat's compensation has been consistent with company performance over the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Patrick Ottensmeyer
CEO, President & Director3.6yrsUS$5.52m0.13% $22.3m
Michael Upchurch
Executive VP & CFO11.3yrsUS$1.70m0.028% $4.8m
Jeffrey Songer
Executive VP & COO3.9yrsUS$1.68m0.036% $6.1m
Warren Erdman
Executive Vice President of Administration & Corporate Affairs9.8yrsUS$1.27m0.056% $9.5m
Brian Hancock
Executive VP & Chief Innovation Officer1.3yrsUS$1.58m0.033% $5.6m
Suzanne Grafton
VP & Chief Accounting Officer2.6yrsno data0.011% $1.8m
Ashley Thorne
Vice President of Investor Relations2.2yrsno datano data
Adam Godderz
Senior VP1.1yrsno data0.0071% $1.2m
Rodrigo Leon
Vice President of Sales & Marketing Automotive0.4yrsno datano data
Michael Naatz
Executive VP & Chief Marketing Officer1.3yrsno data0.018% $3.0m

2.4yrs

Average Tenure

53yo

Average Age

Experienced Management: KSU's management team is considered experienced (2.4 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Patrick Ottensmeyer
CEO, President & Director3.6yrsUS$5.52m0.13% $22.3m
Thomas McDonnell
Presiding Director0yrsUS$240.03k0.12% $20.5m
Robert Druten
Independent Chairman of the Board0yrsUS$350.03k0.018% $3.1m
Lu Córdova
Independent Director9.8yrsUS$231.94k0.0095% $1.6m
Mitchell Krebs
Independent Director2.8yrsUS$200.07k0.0033% $556.3k
Lydia Beebe
Independent Director2.8yrsUS$230.07k0.0048% $820.9k
David Francisco Garza Santos
Independent Director4yrsUS$190.07k0.0021% $351.1k
Antonio O. Garza
Independent Director9.8yrsUS$257.07k0.0037% $620.7k
Henry Maier
Independent Director2.8yrsUS$200.07k0.0085% $1.4m
Janet Kennedy
Director0.2yrsUS$95.10k0.0026% $435.9k

3.2yrs

Average Tenure

62.5yo

Average Age

Experienced Board: KSU's board of directors are considered experienced (3.2 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: KSU insiders have only sold shares in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Kansas City Southern's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Kansas City Southern
  • Ticker: KSU
  • Exchange: NYSE
  • Founded: 1887
  • Industry: Railroads
  • Sector: Transportation
  • Market Cap: US$16.960b
  • Shares outstanding: 96.15m
  • Website: https://www.kcsouthern.com

Number of Employees


Location

  • Kansas City Southern
  • 427 West 12th Street
  • Kansas City
  • Missouri
  • 64105
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
KSUNYSE (New York Stock Exchange)YesCommon StockUSUSDMar 1964
KCYDB (Deutsche Boerse AG)YesCommon StockDEEURMar 1964
KSU *BMV (Bolsa Mexicana de Valores)YesCommon StockMXMXNMar 1964
0JQ4LSE (London Stock Exchange)YesCommon StockGBUSDMar 1964
KSU.PRNYSE (New York Stock Exchange)PFD 4%USUSDDec 1972
K1CS34BOVESPA (Bolsa de Valores de Sao Paulo)BDR EACH 4 REPR 1 COMBRBRLJan 2020

Biography

Kansas City Southern, a transportation holding company, provides domestic and international rail transportation services in North America. The company 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. It operates a commercial corridor of the Mexican railroad system and has its direct rail passageway between Mexico City and Laredo, Texas. The company provides rail access to the United States and Mexico border crossing at Nuevo Laredo, Tamaulipas; and controls and operates the southern half of the rail bridge at Laredo, Texas, as well as the northern half of this bridge. Kansas City Southern also provides rail access to the port of Lazaro Cardenas on the Pacific Ocean; and owns a 157-mile rail line extending from Laredo, Texas to the port city of Corpus Christi, Texas. Its rail network comprises approximately 6,700 route miles extending from the Midwest and Southeast portions of the United States south into Mexico. The company serves the chemical and petroleum, industrial and consumer products, agriculture and minerals, energy, intermodal, and automotive markets. Kansas City Southern was founded in 1887 and is headquartered in Kansas City, Missouri. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/20 01:03
End of Day Share Price2020/02/19 00:00
Earnings2019/12/31
Annual Earnings2019/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.