Critical Contrast: Kansas City Southern (NYSE:KSU) vs. Its Peers

Kansas City Southern (NYSE: KSU) is one of 28 public companies in the “Ground Freight & Logistics” industry, but how does it compare to its peers? We will compare Kansas City Southern to similar businesses based on the strength of its profitability, risk, valuation, earnings, institutional ownership, dividends and analyst recommendations.

Earnings & Valuation

This table compares Kansas City Southern and its peers revenue, earnings per share and valuation.

Gross Revenue EBITDA Price/Earnings Ratio
Kansas City Southern $2.47 billion $1.18 billion 20.48
Kansas City Southern Competitors $5.92 billion $1.74 billion -5.33

Kansas City Southern’s peers have higher revenue and earnings than Kansas City Southern. Kansas City Southern is trading at a higher price-to-earnings ratio than its peers, indicating that it is currently more expensive than other companies in its industry.

Dividends

Kansas City Southern pays an annual dividend of $1.44 per share and has a dividend yield of 1.4%. Kansas City Southern pays out 28.3% of its earnings in the form of a dividend. As a group, “Ground Freight & Logistics” companies pay a dividend yield of 1.6% and pay out 35.4% of their earnings in the form of a dividend. Kansas City Southern has increased its dividend for 3 consecutive years.

Profitability

This table compares Kansas City Southern and its peers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Kansas City Southern 21.42% 11.86% 5.88%
Kansas City Southern Competitors 10.93% 15.03% 5.34%

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Kansas City Southern and its peers, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Kansas City Southern 0 8 9 0 2.53
Kansas City Southern Competitors 187 1317 1823 71 2.52

Kansas City Southern presently has a consensus target price of $112.43, suggesting a potential upside of 7.83%. As a group, “Ground Freight & Logistics” companies have a potential upside of 9.64%. Given Kansas City Southern’s peers higher probable upside, analysts clearly believe Kansas City Southern has less favorable growth aspects than its peers.

Insider & Institutional Ownership

84.5% of Kansas City Southern shares are held by institutional investors. Comparatively, 71.3% of shares of all “Ground Freight & Logistics” companies are held by institutional investors. 1.0% of Kansas City Southern shares are held by company insiders. Comparatively, 11.9% of shares of all “Ground Freight & Logistics” companies are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Volatility and Risk

Kansas City Southern has a beta of 0.81, meaning that its stock price is 19% less volatile than the S&P 500. Comparatively, Kansas City Southern’s peers have a beta of 1.38, meaning that their average stock price is 38% more volatile than the S&P 500.

Summary

Kansas City Southern peers beat Kansas City Southern on 9 of the 15 factors compared.

About Kansas City Southern

Kansas City Southern (KCS) is a holding company. The Company has domestic and international rail operations in North America that are focused on the north/south freight corridor connecting commercial and industrial markets in the central United States with industrial cities in Mexico. The Company’s subsidiaries include The Kansas City Southern Railway Company (KCSR) and Kansas City Southern de Mexico, S.A. de C.V. (KCSM). KCSR serves a 10-state region in the midwest and southeast regions of the United States and has the north/south rail route between Kansas City, Missouri and various ports along the Gulf of Mexico in Alabama, Louisiana, Mississippi and Texas. KCSM operates a corridor of the Mexican railroad system. KCSM’s rail lines provide rail access to the United States and Mexico border crossing at Nuevo Laredo, Tamaulipas. KCSM also provides rail access to the Port of Lazaro Cardenas on the Pacific Ocean.

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