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Kansas City Southern Stock Slips on Third-Quarter Earnings Miss

Kansas City Southern shares slip after the company misses Wall Street's third-quarter earnings forecasts.

Kansas City Southern  (KSU) - Get Kansas City Southern Report posted a split decision Tuesday as the U.S. railroad operator missed Wall Street's third-quarter earnings expectations but beat revenue estimates.

Shares of the Kansas City, Mo., company at last check were off 0.5% near $296.

Kansas City Southern reported income of $156.5 million, or $1.71 a share, compared with $190.2 million, or $2.01 a share, a year earlier. 

Adjusted earnings for the latest quarter came to $2.02 a share, short of the FactSet consensus of $2.04.

Revenue registered $744 million, up 13% from a year earlier and surpassing the FactSet consensus $722.4 million. 

The revenue increase resulted primarily from mix, higher fuel surcharge, and the strengthening of the Mexican peso against the U.S. dollar, the company said.

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Overall, carload volumes were down 3% from a year ago, due primarily to such factors as auto-plant shutdowns driven by the global microchip shortage and increased regulation of refined fuel product shipments into Mexico, resulting in supply-chain disruptions.

Kansas City Southern also cited service interruptions at the Lázaro Cárdenas port in Mexico due to Kansas City Southern of Mexico’s right-of-way blockages resulting from teachers' protests.

"We are encouraged that despite several commercial headwinds, our network is performing extremely well and we are delivering near record velocity and dwell," Patrick Ottensmeyer, KCS president and chief executive, said in a statement.

Velocity is time from origin to destination. Dwell is the amount of time a traincar spends at a terminal.

Last month, Kansas City Southern said it would accept a $27.2 billion cash-and-stock offer from Canadian Pacific. Kansas City had earlier accepted an offer from Canada National.

"This historic combination will enhance competition, create new options for customers, and support economic growth in North America," Ottensmeyer said.