Analysts Taking Aim at Kansas City Southern (NYSE:KSU) Ahead of Earnings

Research firms covering shares of Kansas City Southern (NYSE:KSU) are predicting that the firm will post earnings per share of $1.2 for the quarter when the quarterly report is issued today.  This is the Zacks Research consensus at the time of writing.  For the same period a year ago, Kansas City Southern posted earnings of $1.21 for quarter ended on 2015-09-30.

Leading up to the next earnings announcements investors should pay close attention to the analysts sentiment on the stock and which direction they are revising their estimates.  Over the past 6 months 2 sell-side analysts have lowered their long term earnings per share estimates on the stock.  During that same period 3 analysts have increased their earnings expectations for the firm.  So what does this mean?  Typically if a large percentage of analysts lower their revisions, the company is more likely to disappoint the Street.  If a large number of brokerage firms increase estimates prior to earnings, the company is more likely to impress with their numbers.

Investors will be paying close attention to how the estimated EPS differs from the actual earnings number. Most recently Kansas City Southern (NYSE:KSU) posted a surprise factor of 17.31%.  The actual number was $0.18 away from the Zacks consensus immediately prior to the actual release.  A significant surprise factor can lead to stock volatility and swings in the share price in the hours and days following the earnings report. 

Projected Stock Movement

Research brokerage firms covering shares of Kansas City Southern (NYSE:KSU) are anticipating on a consensus basis that the stock will reach $101.846 within the next 52 weeks.  Of the analysts providing short term targets, the most bullish analyst has a $114 target on the stock.  On the other end, the most conservative has a short term target of $86.  This is based on the 13 analysts taken into consideration by Zacks. The consensus price target was last revised on 2016-10-11.

Each of the 13 covering analysts have also provided a Buy, Sell or Hold recommendation on the stock.  As of 2016-10-16, 5 have a Strong Buy rating on the stock, 1 have a Buy rating, 6 have a Hold rating and 1 have a Sell or Strong Sell.  Taking a look back three months ago to compare sentiment, at that time 4 had a Strong Buy, 1 had a Buy, 6 had a Hold and 1 had a sell rating. 

Zacks also provides a simplified scale for analyst recommendations.  They use a one to five scale where they translate brokerage firm Buy/Sell/Hold recommendations into an average broker rating.  A low number in the 1-2 range typically indicates a Buy, 3 represents a Hold and 4-5 represents a consensus Sell rating. Kansas City Southern (NYSE:KSU) currently has an ABR of 2.23 heading into today’s announcement.  This number is also based on the 13 sell-side firms polled by Zacks

This article is informational purposes only and should not be considered a recommendation to buy or sell Kansas City Southern (NYSE:KSU)


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