KSU - Embedded Expectations Analysis - 2020 05 08
Kansas City Southern (KSU:USA) currently trades near corporate averages relative to UAFRS-based (Uniform) earnings, with a 22.8x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management may be concerned about the impact of COVID-19, equipment and labor costs, and train routes in MexicoSpecifically, management may have concerns about the impact of the COVID-19 pandemic on their operations in Mexico and the US, the duration of the economic slowdown, and their outlook on PSR initiatives and savings. Furthermore, they may be concerned about the potential of their train routes through stations in Mexico, and they may lack confidence in their ability to catch up on their backlog overhauls and further consolidate their trains. Moreover, they may be overstating the impact of their operational improvements on the bottom line and their ability to continue to reduce equipment needs and stabilize their workforce
Kansas City Southern is a transportation holding company with domestic and international rail operations in North America. The company's subsidiary, The Kansas City Southern Railway Company, is a United States Class I railroad that serves a several region in the midwest and southeast regions of United States and has north/south rail route between Kansas City, MO and several main ports along the Gulf of Mexico in Alabama, Louisiana, Mississippi and Texas. The company's subsidiary, Kansas City Southern de Mexico, S.A. de C.V. operates a main commercial corridor of the Mexican railroad system and has as its main route a direct rail passageway between Mexico City and Laredo, TX.
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