It has been about a month since the last earnings report for Kansas City Southern (KSU). Shares have added about 3.3% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Kansas City Southern due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Kansas City Southern Beats on Revenues in Q4

Kansas City Southern’s  fourth-quarter 2018 earnings (excluding 3 cents from non-recurring items) of $1.56 met the Zacks Consensus Estimate. The bottom line, however, rose 13% on a year-over-year basis.

The company delivered revenues of $694 million, marginally beating the Zacks Consensus Estimate of $691.9 million. However, the top line improved 5.1% on a year-over-year basis. Overall carload volumes remained flat year over year.

In the reported quarter, adjusted operating income increased 4% to $248 million. Kansas City Southern’s operating ratio (operating expenses as a percentage of revenues) deteriorated to 64.3% compared with 64% a year ago due to 6% rise in operating expenses. The company aims at an operating ratio of 60-61% by 2021.

Segmental Details

The Chemical & Petroleum segment generated revenues of $164 million, up 19% year over year. Volumes expanded 16% year over year. Revenues per carload also climbed 3% from the prior-year quarter.

The Industrial & Consumer Products segment generated revenues of $139.5 million, down 5% year over year. Dismal performances across all segmental units hurt results. While business volumes contracted 9%, revenues per carload increased 4% year over year.

The Agriculture & Minerals segment’s total revenues were $131.7 million, up 8% year over year. While business volumes inched up 3%, revenues per carload were up 5%, both on a year-over-year basis.

The Energy segment generated revenues of $65.3 million, down 6% year over year. Disappointing performances at the Utility Coal and Frac Sand units hampered the segment’s results. While business volumes declined 14% year over year, revenues per carload augmented 9%.

Intermodal revenues were $98.2 million, up 1% year over year. While business volumes ascended 4%, revenues per carload dipped 3% in the quarter under review.

Revenues at the Automotive segment came in at $59.9 million, down 1% year over year. While business volumes slid 5%, revenues per carload increased 4%, both on a year-over-year basis.

Other revenues totaled $35.4 million, up 36% year over year.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

At this time, Kansas City Southern has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Kansas City Southern has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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