Kansas City Southern KSU is scheduled to report first-quarter 2021 earnings on Apr 16, before market open.

The Zacks Consensus Estimate for the company’s first-quarter earnings has been revised downward by 1.4% to $2.09 per share in the past 90 days. Also, the Zacks Consensus Estimate for first-quarter revenues indicates a 2.9% fall from the year-ago quarter’s reported figure.

Against this backdrop, let’s discuss the factors that might have impacted Kansas City Southern’s performance in the March quarter.

Kansas City Southern Price and EPS Surprise

Kansas City Southern price-eps-surprise | Kansas City Southern Quote

Low crude shipments are expected to have put pressure on the company’s energy business. The Zacks Consensus Estimate for Energy revenues suggests 1.8% fall from the year-ago quarter’s reported figure. Per the consensus, revenues in the Automotive and Intermodal segments plunged 9.7% and 5.6%, respectively, on a year-over-year basis.

Volumes are also expected to have been low in the industrial and consumer business unit due to significant weakness in the Kansas City Southern’s metals business. This anticipated weakness in volumes is likely to get reflected in Industrial and Consumer Products revenues. The consensus mark for Industrial and Consumer Products revenues suggests 13.8% decline from first-quarter 2020 reported figure.

Meanwhile, revenues in the Chemical and Petroleum segment are likely to have aided the company’s top-line numbers in the quarter to be reported. The Zacks Consensus Estimate for Chemical and Petroleum revenues suggests 9% rise from the year-ago quarter’s levels.

Additionally, Kansas City Southern’s first-quarter performance is expected to have benefited from reduced costs and increased efficiency owing to the precision-scheduled railroading (PSR) model.

Earnings Whispers

The proven Zacks model does not predict an earnings beat for Kansas City Southern this time around. Notably, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, this is not the case here as elaborated below. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: Kansas City Southern has an Earnings ESP of 0.00%, as the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $2.09. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Kansas City Southern carries a Zacks Rank #3.

Highlights of Q4 Earnings

Kansas City Southern’s fourth-quarter 2020 earnings (excluding 9 cents from non-recurring items) of $1.89 per share missed the Zacks Consensus Estimate of $1.91. However, the bottom line moved up 3.9% year over year, driven by lower costs. Notably, the company is constantly trying to increase efficiencies and reduce costs through its PSR model.

Stocks to Consider

Investors interested in the broader Transportation sector may consider Canadian Pacific Railway Limited CP, Herc Holdings Inc. HRI and Alaska Air Group, Inc. ALK as these stocks possess the right combination of elements to beat on earnings this reporting cycle.

Canadian Pacific has an Earnings ESP of +5.41% and is Zacks #3 Ranked, presently. The company will release first-quarter 2021 results on Apr 21.

Herc Holdings has an Earnings ESP of +18.81% and sports a Zacks Rank of 1, at present. The company will release first-quarter 2021 results on Apr 22.

Alaska Air Group has an Earnings ESP of +3.20% and is currently a Zacks #3 Ranked player. The company will release first-quarter 2021 results on Apr 22.

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