Story updated at 10 a.m. to reflect market activity.
Kansas City Southern fell -0.2% to $116.15 in morning trading.
The analyst firm also raised its EPS estimates for the company. Kansas City Southern has multiple potential growth catalysts according to Credit Suisse analysts.
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Separately, 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 some important positives, 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, expanding profit margins, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. 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 7.9%. Since the same quarter one year prior, revenues slightly increased by 9.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- 41.46% 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 15.42% trails the industry average.
- Net operating cash flow has increased to $143.30 million or 14.09% when compared to the same quarter last year. Despite an increase in cash flow, KANSAS CITY SOUTHERN's average is still marginally south of the industry average growth rate of 20.41%.
- The current debt-to-equity ratio, 0.60, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that KSU's debt-to-equity ratio is low, the quick ratio, which is currently 0.63, displays a potential problem in covering short-term cash needs.
- KANSAS CITY SOUTHERN's earnings per share declined by 9.6% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over 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 ($4.68 versus $3.18).
- You can view the full analysis from the report here: KSU Ratings Report