NEW YORK (TheStreet) -- Kansas City Southern (KSU) shares closed trading down 0.53% to $115.79 after the railroad company reported a 9% increase in revenue over the same period last year to $678 million, ahead of analysts expectations of $672 million in revenue.
The company also reported net income of $138 million, a 16% increase of the previous year, or $1.29, also ahead of analysts expectations by 4 cents per share.
The company's strong quarter was a result of higher freight volumes spurred by economic growth in the U.S. and Mexico.
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TheStreet Ratings team rates KANSAS CITY SOUTHERN as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation: "We rate KANSAS CITY SOUTHERN (KSU) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income, good cash flow from operations, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results." Highlights from the analysis by TheStreet Ratings Team goes as follows: KSU's revenue growth has slightly outpaced the industry average of 8.9%. Since the same quarter one year prior, revenues rose by 12.2%. Growth in the company's revenue appears to have helped boost the earnings per share. The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Road & Rail industry. The net income increased by 742.9% when compared to the same quarter one year prior, rising from $15.40 million to $129.80 million. Net operating cash flow has increased to $253.00 million or 25.99% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -2.35%. 42.80% 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 19.97% trails the industry average. The debt-to-equity ratio is somewhat low, currently at 0.62, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that KSU's debt-to-equity ratio is low, the quick ratio, which is currently 0.55, displays a potential problem in covering short-term cash needs. You can view the full analysis from the report here: KSU Ratings Report STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
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