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Kansas City Southern KSU

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Morningstar’s Analysis

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5-Star Price

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Economic Moat

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Capital Allocation

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Kansas City Southern's Q4 Carloads Continue Recovery; Margin Outlook Impressive, but Valuation Lofty

Matthew Young, CFA Equity Analyst

Analyst Note

| Matthew Young, CFA |

Wide-moat railroad Kansas City Southern posted 5% lower fourth-quarter revenue year over year, in line with our expectations. Carload declines once again moderated, falling 2.7% (down 6% for all of 2020), while revenue per carload fell 1% on sharply lower fuel surcharges and unfavorable foreign exchange, which more than offset higher core pricing. Carloads would've risen 2.5% if not for protest-related disruption in Mexico.

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Company Profile

Business Description

Kansas City Southern, the smallest Class I railroad, derives about half of its $2.7 billion revenue on 3,400 miles of track in the Central and Southern United States. Remaining sales are produced by operating concessions on 3,300 miles of rail in Mexico and 47 miles of track adjacent to the Panama Canal. KCS' freight includes industrial and forest products (21% of total revenue), chemicals and petroleum (26%), agriculture and minerals (18%), intermodal (13%), energy (9%), and autos (9%); other revenue stems from switching, demurrage, and the like.

Contact
427 West 12th Street
Kansas City, MO, 64105
T +1 816 983-1303
Sector Industrials
Industry Railroads
Most Recent Earnings Sep 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type Cyclical
Employees 7,040

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