Kansas City Southern Second Quarter Net Up 45 Cents

KANSAS CITY – Kansas City Southern saw a 45 cent increase in its second-quarter earnings per share over last year’s second quarter, with the railroad holding company riding a boost in cross-border rail traffic with Mexico.

KCS said that its earnings per diluted share rose to $1.09 per share, compared to 64 cents per share a year ago. Total revenues for KCS hit  $545 million, a two percent increase over last year’s second quarter.

KCS revenues fell short of the $570.8 million expected by analysts surveyed by Thomson Reuters, according to the Kansas City Business Journal. As a result, the company’s stock fell by as much as 4 percent during the day, but recovered its losses and closed up for the day at $68.85 by the end of trading.

New business in Mexico and other emerging international markets pose good news for the company’s future, according to Zack’s Investment Research. Specifically, KCS will likely see a boost in rail traffic from increasing automobile production in Mexico as well as growing global demand for coal.

KCS actually saw a 24% decrease in revenue from coal transport from last year as the U.S. coal market tumbled, which pulled down its overall revenue from energy, but growth in Asian markets for coal and increases in domestic oil traffic should help boost KCS’s energy transport revenues going forward.

Zack’s also notes that KCS can also expect strong earnings from improvements in the company’s cost structure and a reduction in debt expenses.

But KCS also faces stiff competition, increased railroad regulation, market uncertainties, and a robustly unionized labor pool, all of which limit the company’s growth potential.

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