QUOTE AND NEWS
Market Intelligence Center  Jul 22  Comment 
The patented option trade-picking algorithms behind MarketIntelligenceCenter.com's Artificial Intelligence Center have selected a covered call trade on Kansas City Southern (KSU) that includes 3.21% downside protection. Sell one contract of the...
TheStreet.com  Jul 21  Comment 
Story updated at 10 a.m. to reflect market activity. NEW YORK (TheStreet) -- Credit Suisse raised its price target for Kansas City Southern to $127 from $120 Monday, reiterating its "outperform" rating for the stock. Kansas City Southern fell...
SeekingAlpha  Jul 18  Comment 
Kansas City Southern (NYSE:KSU) Q2 2014 Earnings Conference Call July 18, 2014 08:45 AM ET Executives Dave Starling - President and CEO Pat Ottensmeyer - EVP of Sales and Marketing Mike Upchurch - EVP and CFO Jose Zozaya -...
newratings.com  Jul 18  Comment 
WASHINGTON (dpa-AFX) - Transportation holding company Kansas City Southern (KSU) reported Friday a profit for the second quarter that soared from last year, which was weighed down hefty debt retirement costs. The results reflected double-digit...
Reuters  Jul 18  Comment 
Railroad operator Kansas City Southern reported higher-than-expected quarterly revenue as it shipped more agriculture products and automobiles.
DailyFinance  Jul 18  Comment 
Kansas City Southern (KCS) (NYSE:KSU) reported second quarter 2014 revenues of $650 million. Overall, carload volumes were 7% higher than in second quarter 2013. Second quarter revenue growth compared to 2013 was led by a...
Bulk Transporter  Jul 16  Comment 
Global Partners LP and Kansas City Southern plan to develop a unit train terminal in Port Arthur TX. Construction of the terminal is contingent upon Global’s receipt of all necessary permits. The waterborne terminal, which will be constructed...
Market Intelligence Center  Jul 11  Comment 
The patented algorithms that power MarketIntelligenceCenter.com's Artificial Intelligence Center found a trading opportunity with Kansas City Southern (KSU) that should provide a 3.70% return in just 71 days. Sell one Sep. '14 call at the $110.00...
StreetInsider.com  Jul 8  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Corporate+News/Global+Partners+%28GLP%29%2C+Kansas+City+Southern+%28KSU%29+Plan+Development+of+Unit+Train+Terminal+in+Texas/9644149.html for the full story.
Market Intelligence Center  Jun 27  Comment 
After Thursday’s trading in Kansas City Southern (KSU) the option-trade picking algorithms that power MarketIntelligenceCenter.com's Artificial Intelligence Center uncovered a trade that offers a 3.19% return, or 23.32% annualized (for...




 

Kansas City Southern (NYSE: KSU) is a railroad shipping company that operates in the U.S. and Mexico. The company's principal subsidiary is its wholly owned Kansas City Southern Railway Company (KCSR). In Mexico, KSU's Kansas City Southern de Mexico (KCSM) operates a primary commercial corridor of the Mexican railroad system and serves Mexican industrial cities and three of its largest shipping ports. KSU also owns 50% of the stock of the Panama Canal Railway Company (PCRC), providing ocean-to-ocean freight and passenger service along the Panama Canal.[1] KSU's most significant commodity cargo is forest products (such as timber) and metals, minerals and agricultural goods like corn and other grains, chemicals and petroleum, and coal.[2]

KSU faces the threat of record high oil prices. The company also faces increased competition from trucks which are newly being granted access to cross the border onto U.S. highways, thus decreasing the need to use trains to send goods across the border.

Business Overview

Business & Financial Metrics[3]

In 2009, KSU generated $68.0 million in net income on $1.48 billion in revenues. This represented a 63% decrease in net income on a 20% decrease in total revenue from 2008.

IMAGE:KSU-Income2009.jpg[3]

Business Segments

In 2008, KSU consolidated its business operations into one reportable business segment. Its focus is the operation of a single rail network.[4]

Key Trends and Forces

The rise in fuel prices increases KSU's costs.

Since fuel prices directly affect expenses, KSU and other railroads have methods of compensating for rising fuel costs. The first is fuel hedging, wherein transportation firms buy futures contracts that allow them to purchase fuel in the future at a predetermined price. The other main way that firms offset rising fuel costs is by passing them on to customers through fuel surcharges. Fuel surcharges, however, make rail shipping more expensive for customers, who supply all of KSU's business.

The demand for ethanol raises demand for grains, which are one of KSU's biggest sources of revenue.

Due to high oil prices and concerns about the environment and foreign dependence for oil, demand for biofuels like ethanol has increased rapidly. Grains such as corn are commonly used as the main ingredient in ethanol production.

A ruling that lets Mexican trucks operate in the U.S. will hurt KSU's truck-to-train operations.

Truck-to-train intermodal shipping, in which Mexican trucks transfer their goods to KSU trains for transport into the United States, is an important revenue source for KSU.[5] The North American Free Trade Agreement (NAFTA) originally called for Mexican trucks to have unrestricted access to U.S. highways, but this didn't happen until 2007, when the U.S. Supreme Court overturned a lesser court's ruling blocking access to Mexican trucks. As part of a pilot program introduced that same year, 500 trucks from 100 Mexican firms were given permission to operate freely on U.S. highways.[6]

KSU was named as a defendant in a fuel surcharge-fixing lawsuit.

In March 2008, Archer-Daniels-Midland Company (ADM) filed an antitrust lawsuit against five U.S. railroad companies, including KSU. The suit alleges that Burlington Northern Santa Fe (BNI), CSX (CSX), Norfolk Southern (NSC), Union Pacific (UNP) and KSU cooperated in fixing their prices for fuel surcharges.[7]

Competition

Kansas City Southern is one of the seven Class 1 railroads in the United States.[8] However, KSU's most direct competitors in the geographical markets that it serves are Burlington Northern Santa Fe (BNI) and Union Pacific (UNP) in the U.S. and Ferromex, a private rail company with the largest (by mileage) railroad in Mexico.[9]

References

  1. KSU 2007 10-K, page 1
  2. KSU 2007 Annual Report, page 6
  3. 3.0 3.1 KSU 2009 10-K pg. 30  
  4. KSU 2009 10-K pg. 56  
  5. KSU 2007 10-K, pages 29, 32
  6. Lawmakers Try Again to Block Mexican Truck Program - NJ.com, 7/10/08
  7. Railroad shipping: Archers, Daniel, Midland Files Lawsuit Against Rail Carriers Over Fuel Surcharges - Logistics Management Magazine, 3/31/2008
  8. Class 1 Railroad Statistics - Association of American Railroads 4/21/08
  9. KSU 2007 10-K, page 4
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