NEW YORK (TheStreet) -- Kansas City Southern (KSU) shares are climbing in after-market trading on Wednesday, up 0.6% to $101.44 in after the closing bell today.
The freight rail holding company posted record revenues of $607 million and an adjusted diluted earnings per share of $1.05 during the first quarter, according to the company's earnings report.
The increase in total revenue was led by a 40% increase in agriculture and minerals shipping. Year over year quarterly carload volumes increased 4%.
Reported net income for the quarter came in at $94 million, a 9.6% decrease from the $104 million it posted in first quarter 2013.
TheStreet Ratings team rates KANSAS CITY SOUTHERN as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
"We rate KANSAS CITY SOUTHERN (KSU) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, expanding profit margins, largely solid financial position with reasonable debt levels by most measures and growth in earnings per share. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- KSU's revenue growth has slightly outpaced the industry average of 4.7%. Since the same quarter one year prior, revenues slightly increased by 8.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Net operating cash flow has increased to $225.80 million or 43.63% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 10.42%.
- 41.33% is the gross profit margin for KANSAS CITY SOUTHERN which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 18.48% trails the industry average.
- The debt-to-equity ratio is somewhat low, currently at 0.65, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.92 is somewhat weak and could be cause for future problems.
- KANSAS CITY SOUTHERN has improved earnings per share by 24.1% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, KANSAS CITY SOUTHERN reported lower earnings of $3.18 versus $3.42 in the prior year. This year, the market expects an improvement in earnings ($4.60 versus $3.18).
- You can view the full analysis from the report here: KSU Ratings Report