Will Kansas City Southern (KSU) Disappoint In Q1 Earnings?
Zacks Investment Research | Apr 11, 2019 10:43PM ET
Kansas City Southern (NYSE:KSU) is scheduled to report first-quarter 2019 results on Apr 17, before the market opens.
In the last reported quarter, the company came up with in-line earnings per share. Meanwhile, the bottom line rose 13% on a year-over-year basis. Also, revenues surpassed the Zacks Consensus Estimate and improved year over year as well.
Furthermore, with the Zacks Consensus Estimate for first-quarter earnings being revised 2.7% downward in the last 60 days, things do not look rosy for the company.
Let’s delve deeper to unearth the factors likely to influence this railroad operator’s results in the soon-to-be-reported quarter.
High operating expenses due to costs on the labor and fuel fronts might hamper Kansas City Southern’s bottom line in the first quarter. In fact, the company’s operating ratio (operating expenses as a percentage of revenues), a key measure of efficiency, could also worsen on the same ground.
Notably, the Zacks Consensus Estimate for first-quarter 2019 operating ratio stands at 65% compared with 63% reported in the fourth quarter of 2018. In fact, lower the value of the ratio the better. Elevated capital expenses are also likely to bump up the operating costs in the soon-to-be-reported quarter.
Additionally, going by the last few quarters’ performances, the Energy segment might repeat its dismal performance in the first quarter of the year. This could further affect the company’s top-line growth. The Zacks Consensus Estimate for first-quarter Energy segment revenues is pegged at $66 million, roughly matching the figure reported in the final quarter of 2018. Segmental volumes are likely to be hurt due to weakness in the utility coal sub-group.
However, as was the case in the final quarter of 2018, the Chemical & Petroleum segment is anticipated to perform well in the first quarter, driven by expanded volumes.The Zacks Consensus Estimate for first-quarter Chemical & Petroleum segment revenues stands at $165 million, above the figure reported in fourth-quarter 2018.
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