Zacks Investment Research Lowers Kansas City Southern (NYSE: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 issued on Monday, September 11th.

According to Zacks, “Kansas City Southern's shares comfortably outperformed the industry it belongs to 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. Moreover, high fuel costs might limit bottom line growth going forward.”

Several other research analysts have also recently weighed in on KSU. BMO Capital Markets reiterated a “hold” rating and set a $92.00 price target on shares of Kansas City Southern in a research note on Wednesday, May 24th. Credit Suisse Group restated a “neutral” rating and set a $90.00 price objective (up from $87.00) on shares of Kansas City Southern in a research report on Sunday, May 28th. Aegis raised their price objective on shares of Kansas City Southern from $110.00 to $115.00 and gave the company a “buy” rating in a research report on Monday, June 19th. BidaskClub downgraded shares of Kansas City Southern from a “strong-buy” rating to a “buy” rating in a report on Thursday, June 22nd. Finally, Stifel Nicolaus reiterated a “buy” rating and issued a $108.00 price target on shares of Kansas City Southern in a report on Friday, June 30th. Eleven research analysts have rated the stock with a hold rating, eight have issued a buy rating and one has assigned a strong buy rating to the stock. The stock has a consensus rating of “Buy” and an average target price of $105.53.

Shares of Kansas City Southern (NYSE:KSU) traded up 0.45% during trading on Monday, hitting $108.68. The stock had a trading volume of 515,334 shares. The company has a market capitalization of $11.46 billion, a price-to-earnings ratio of 21.87 and a beta of 0.79. The company’s 50 day moving average price is $104.59 and its 200 day moving average price is $96.84. Kansas City Southern has a 52 week low of $79.05 and a 52 week high of $109.13.

Kansas City Southern (NYSE:KSU) last issued its quarterly earnings results on Friday, July 21st. The transportation company reported $1.33 earnings per share for the quarter, topping the Thomson Reuters’ consensus estimate of $1.26 by $0.07. The business had revenue of $656.40 million for 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 company’s revenue was up 15.5% compared to the same quarter last year. During the same quarter last year, the company posted $1.22 EPS. Analysts predict that Kansas City Southern will post $5.20 earnings per share for the current year.

Kansas City Southern declared that its Board of Directors has initiated a share buyback plan on Tuesday, August 15th that authorizes the company to buyback $800.00 million in outstanding shares. This buyback authorization authorizes the transportation company to buy up to 7.1% of its stock through open market purchases. Stock buyback plans are generally a sign that the company’s management believes its stock is undervalued.

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In related news, insider Delano Jose Guillermo Zozaya sold 6,000 shares of the stock in a transaction on Monday, August 28th. The shares were sold at an average price of $102.93, for a total transaction of $617,580.00. Following the sale, the insider now directly owns 42,087 shares of the company’s stock, valued at $4,332,014.91. The sale was disclosed in a legal filing with the Securities & Exchange Commission, which is accessible through this link. Also, Director Henry J. Maier purchased 3,000 shares of the stock in a transaction that occurred on Thursday, August 17th. The shares were purchased at an average cost of $106.19 per share, for a total transaction of $318,570.00. Following the completion of the acquisition, the director now directly owns 4,159 shares of the company’s stock, valued at approximately $441,644.21. The disclosure for this purchase can be found here. Insiders have sold a total of 14,469 shares of company stock worth $1,522,510 in the last 90 days. 0.95% of the stock is currently owned by company insiders.

A number of institutional investors and hedge funds have recently bought and sold shares of the business. BlackRock Inc. lifted its holdings in Kansas City Southern by 4,542.5% during the first quarter. BlackRock Inc. now owns 10,407,991 shares of the transportation company’s stock valued at $892,591,000 after purchasing an additional 10,183,801 shares in the last quarter. Vanguard Group Inc. raised its position in shares of Kansas City Southern by 2.5% in the second quarter. Vanguard Group Inc. now owns 10,363,571 shares of the transportation company’s stock valued at $1,084,547,000 after buying an additional 253,631 shares during the last quarter. State Street Corp increased its position in Kansas City Southern by 3.3% during the first quarter. State Street Corp now owns 4,658,164 shares of the transportation company’s stock worth $399,479,000 after purchasing an additional 146,836 shares during the last quarter. Massachusetts Financial Services Co. MA increased its position in Kansas City Southern by 588.6% during the first quarter. Massachusetts Financial Services Co. MA now owns 4,313,685 shares of the transportation company’s stock worth $369,943,000 after purchasing an additional 3,687,248 shares during the last quarter. Finally, Sustainable Growth Advisers LP increased its position in Kansas City Southern by 19.7% during the second quarter. Sustainable Growth Advisers LP now owns 2,500,791 shares of the transportation company’s stock worth $261,708,000 after purchasing an additional 412,275 shares during the last quarter. 84.52% of the stock is currently owned by institutional investors and hedge funds.

About Kansas City Southern

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.

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