KSU  Kansas City Southern

Exchange

NYSE

Sector

Transportation

Industry

Railroads

Market Cap.

10.18B

Vuru Grade

43.72/100

Current Price

$95.95
+2.88 (+3.09%)

Growth Price

$58.13
Overvalued by 39.42%

Company Metrics

  • P/E 19.91
  • P/S 4.15
  • P/B 2.38
  • EPS 4.82
  • Cash ROIC 1.26%
  • Cash Ratio 0.23
  • Dividend 1.32 / 1.38%
  • Avg. Vol. 1.31M
  • Shares 106.10M
  • Market Cap. 10.18B

Company Description

Kansas City Southern, through its subsidiaries, engages primarily in the freight rail transportation business. It operates north/south rail between Kansas City, Missouri, and various ports along the Gulf of Mexico in Alabama, Louisiana, Mississippi, and Texas in the midwest and southeast regions of the United States. The company also operates direct rail passageway between Mexico City and Laredo i... more


Download 10 Years of Financial Statements:
Income Statement   Balance Sheet   Cash Flow

News

Kansas City Southern railway chugs through NAFTA uncertainty
KMBC Kansas City - 18 hours ago
The daily cross-border journey for Kansas City Southern trains has taken on new importance with President Donald Trump's tough talk on Mexico, trade, and the North American Free Trade Agreement.
How These Railroads Stocks are Faring? -- CSX Corp., Kansas City Southern ...
PR Newswire (press release) - May 26, 2017
For today, Stock-Callers.com scans the recent performances of these four stocks: CSX Corp. (NASDAQ: CSX), Kansas City Southern (NYSE: KSU), Norfolk Southern Corp. (NYSE: NSC), and Canadian Pacific Railway Ltd (NYSE: CP). Register now and get full ...
What Commodities Led Kansas City Southern's Rise in Week 19?
Market Realist - May 23, 2017
In the week ended May 13, 2017, Kansas City Southern's (KSU) total railcars rose 10.4% compared to the corresponding week of 2016.
Kansas City Southern (KSU) Position Held by Baldwin Investment Management LLC - The Cerbat Gem
Kansas City Southern (KSU) Given Media Sentiment Rating of 0.11 - Chaffey Breeze
What Boosted Kansas City Southern's Carloads in Week 17?
Market Realist - May 8, 2017
In the week ended April 29, 2017, Kansas City Southern's (KSU) total railcars rose 24% from the corresponding week of 2016.
Kansas City Southern: Unfolding Its Intermodal Traffic in Week 18
Market Realist - May 13, 2017
In the past few weeks, Kansas City Southern (KSU), the smallest Class I railroad company in the United States, has seen its intermodal traffic slow.
Risk Malaise Alert in Option Market: Kansas City Southern Implied Price Swing ... - CML News
The Retirement Planning Group Holds Position in Kansas City Southern (KSU) - BangaloreWeekly
Kansas City Southern (KSU) PT Raised to $90 at Credit Suisse on Positive ...
StreetInsider.com - May 25, 2017
Credit Suisse raised its price target on Kansas City Southern (NYSE: KSU) to $90.00 (from $87.00) while maintaining a Neutral rating, following a review of weekly rail volumes data reported to the AAR.
Kansas City Southern: A Look at Its Intermodal Traffic
Market Realist - May 8, 2017
In the past few weeks, Kansas City Southern (Kansas City Southern), the smallest Class I railroad company in the United States, has seen its intermodal traffic slow.
Week 18: Strong Coal Ups Kansas City Southern's Carloads in Week 18
Market Realist - May 13, 2017
In the week ended May 6, 2017, Kansas City Southern's (KSU) total railcars rose 15.2% from the corresponding week of 2016.
Credit Suisse Group AG Reaffirms "Neutral" Rating for Kansas City Southern (KSU)
BNB Daily (blog) - May 28, 2017
Kansas City Southern logo Credit Suisse Group AG reaffirmed their neutral rating on shares of Kansas City Southern (NYSE:KSU) in a report published on Sunday.
Credit Suisse Group AG Reiterates "Neutral" Rating for Kansas City Southern (KSU) - The Cerbat Gem
Kansas City Southern (KSU) Earns Neutral Rating from Credit Suisse Group AG - Sports Perspectives
Shippers could face delays from KCS track work
JOC.com - May 16, 2017
Kansas City Southern Railway (KCSR) plans to perform maintenance work on more than 7 miles of track between Missouri and Louisiana this summer that could cause delays for shippers.
Growth Rate Assumed by Market

We did a reverse valuation to calculate the growth rate the market is assuming for KSU to be considered fairly valued at its current market price. It's useful to compare this to the growth rate we're assuming for the Growth Price.

Future Free Cash Flow Growth Rate

This is the annual growth rate we've applied to calculate KSU's Free Cash Flow for the next 10 years. To calculate it, we looked at several time periods of the last 10 years. Feel free to adjust it, but we limit the initial growth rate to 20% and slow it down over the years. Otherwise, long-term sustainability issues come into play.

Discount Rate

The discount rate is the annual rate of return an investor requires to take the risk of investing in a single stock. To account for that risk, this should be above 8-10%, as this is the avg. annual rate of return for the S&P500 over the past 100 years.

$95.95 Current Price

$58.13 Growth Price (DCF)

Overvalued by 39.42%


Growth Rate Assumed by Market: 26.21%


Future Free Cash Flow Growth Rate: 0.0%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$97.29 Book Price

Fairly valued


Poor Cash Return on Invested Capital over the past 5 years

KSU has been unable to consistently generate sufficient returns from its investments in buildings, projects and equipment. This could be due to poor management, lack of an economic moat or the capital intensive nature of the business.

KSU has only created $1.26 of cash for every $100 invested.
Figures in USD. Fiscal year ends in December
20122013201420152016
Free Cash Flow 133.20M -8.30M -64.30M 77.10M 322.80M
divided by
Invested Capital 5.90B 6.28B 6.84B 7.45B 7.90B
Cash ROIC 2.26% -0.13% -0.94% 1.04% 4.08%

Satisfactory Return on Equity over the past 5 years

KSU has generated adequate returns with capital that shareholders have invested. This is sufficient and implies that management performance has been good.

KSU has generated $12.06 of Earnings for every $100 of Shareholders' Equity.
Figures in USD. Fiscal year ends in December
20122013201420152016
Net Income 379.40M 353.30M 504.30M 485.30M 479.90M
divided by
Stockholders' Equity 3.10B 3.37B 3.76B 3.91B 4.09B
Return on Equity 12.25% 10.48% 13.43% 12.40% 11.73%

Mediocre Business Performance over the past 10 years

KSU isn't a strong business and might be consistently attempting to fuel growth with debt or has trouble staying profitable. The lack of predictability in free cash flow should be concerning for the reliability of future earnings.

KSU has been unable to consistently create value for shareholders.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Free Cash Flow -29.00M -120.80M -56.30M 209.00M 143.00M 133.20M -8.30M -64.30M 77.10M 322.80M

Weak Balance Sheet

KSU's financial position is not ideal. The key is to check whether KSU is using debt to fuel its growth and the sustainability of that tendency. Highly capital intensive businesses (see Economic Moat) follow this route, which can deeply impact the future prospects of the business.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Cash 55.50M 229.90M 117.50M 85.40M 72.40M 72.60M 429.50M 348.00M 136.60M 170.60M
Current Assets 645.70M 690.70M 613.80M 598.20M 642.50M 522.30M 942.40M 818.30M 537.00M 648.00M
Total Assets 4.93B 5.44B 5.48B 5.64B 6.17B 6.40B 7.44B 8.09B 8.34B 8.82B
Current Liabilities 1.10B 1.10B 410.80M 431.20M 437.40M 424.80M 730.60M 898.80M 757.60M 744.40M
Total Liabilities 3.20B 3.53B 3.42B 3.21B 3.41B 3.30B 4.06B 4.34B 4.43B 4.73B
Stockholder' Equity 1.73B 1.91B 2.06B 2.43B 2.76B 3.10B 3.37B 3.76B 3.91B 4.09B
Current Ratio 0.59 0.63 1.49 1.39 1.47 1.23 1.29 0.91 0.71 0.87
TL-to-TA 0.65 0.65 0.62 0.57 0.55 0.52 0.55 0.54 0.53 0.54

Consistent Reinvestment of Profits over the past 10 years

KSU has consistently retained profits. This may put KSU in a strong position to invest for the future, by buying new machinery, investing in R&D or a number of other options. By effectively using these earnings, KSU can greatly improve their long-term economic picture.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Retained Earnings 1.17B 1.34B 1.39B 1.55B 1.88B 2.17B 2.42B 2.80B 2.96B 3.13B
Retained Earnings Growth - 14.43% 4.26% 11.00% 21.14% 15.53% 11.83% 15.63% 5.82% 5.71%

Growing Competitive Advantage over the past 10 years

KSU has a growing competitive advantage. This could be due to strong branding, the ability to keep costs low, or some other characteristic that is hard to replicate. Look at its future prospects to determine sustainability and whether the economic moat will continue to strengthen.

$13.95 of every $100 of Revenue have been pure profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Net Income 153.80M 168.70M 57.00M 180.20M 330.30M 379.40M 353.30M 504.30M 485.30M 479.90M
divided by
Revenue 1.74B 1.85B 1.48B 1.81B 2.10B 2.24B 2.37B 2.58B 2.42B 2.33B
Net Profit Margin 8.82% 9.11% 3.85% 9.93% 15.74% 16.95% 14.91% 19.57% 20.06% 20.56%

Strong Pricing Power over the past 10 years

KSU has maintained substantial gross margins, suggesting that they have been able to set prices without consideration of the cost of goods sold. This potentially leaves flexibility in inflationary environments to raise prices on consumers and maintain profitability.

$62.99 of every $100 worth of sales have been Gross Profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Gross Profit 987.70M 1.01B 822.60M 1.04B 2.10B 1.30B 1.40B 1.54B 1.53B 1.52B
divided by
Revenue 1.74B 1.85B 1.48B 1.81B 2.10B 2.24B 2.37B 2.58B 2.42B 2.33B
Gross Margin 56.67% 54.51% 55.57% 57.35% 100.00% 58.17% 59.24% 59.82% 63.28% 65.25%

High Capital Intensity over the past 10 years

KSU spends large amounts of capital buying new equipment or investing in new facilities to stay competitive. Over the long term, those costs may have to be fuelled by debt. Look at the growth of Shareholders' Equity to see if this strategy is having a positive or negative impact.

238.81% of Profits are being spent on Capital Expenditures, like Property, Plant, & Equipment, required to run the business.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Capital Expenditure 410.50M 576.50M 349.20M 287.30M 495.00M 540.00M 806.60M 970.30M 832.20M 590.50M
divided by
Net Income 153.80M 168.70M 57.00M 180.20M 330.30M 379.40M 353.30M 504.30M 485.30M 479.90M
Capital Expenditure Ratio 266.91% 341.73% 612.63% 159.43% 149.86% 142.33% 228.30% 192.41% 171.48% 123.05%

Very Strong Dividend History over the past 10 years

KSU has consistently distributed a dividend for at least the past 10 years. Such a long dividend history suggests KSU is very established in its market and that its dividend distribution is likely to continue for a significant period of time.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Dividend Paid 23.30M 15.20M 11.00M 11.00M 3.00M 86.10M 71.20M 116.60M 140.10M 142.80M
divided by
Shares Outstanding 97.62M 98.60M 93.65M 107.53M 109.83M 110.08M 110.34M 110.43M 109.92M 107.76M
Dividend Paid Per Share 0.24 0.15 0.12 0.10 0.03 0.78 0.65 1.06 1.27 1.33
Price at Year End 34.38 18.17 33.83 48.13 68.01 82.06 122.33 122.68 74.27 84.85
Dividend Yield 0.69% 0.85% 0.35% 0.21% 0.04% 0.95% 0.53% 0.86% 1.72% 1.56%

History of Stock Buybacks over the past 10 years

KSU has some history of delivering increased value for shareholders in the form of stock buybacks. These have helped improve financial metrics and increase each shareholders' relative ownership stake in the company, due to fewer shares outstanding and holding the same number of shares.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Shares Outstanding 97.62M 98.60M 93.65M 107.53M 109.83M 110.08M 110.34M 110.43M 109.92M 107.76M
Stock Bought Back - -1.00% 5.29% -12.91% -2.09% -0.23% -0.24% -0.08% 0.47% 2.00%
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