de C.V. (“KCSM”), one each 73% Meridian Speedway, LLC (“MSLLC”) and 25% owned Ferrocarril y Terminal del Valle de México, S.A. de C.V. (“FTVM”), and two 50% owned affiliates are Panama Canal Railway Company (“PCRC”)AND Southern Capital Corporation, LLC (“Southern Capital”). The company business is Transportation of agricultural products, automotive, chemicals, energy, industrial products 1,2] . Kansas City Southern (KCS) (NYSE:KSU) reported second quarter 2009 revenues of$341.3 million compared with $486.2 million in the second quarter of 2008.The result was due to 19% decline in the volume and 72% reduction in fuel surcharge. The good news on KCS front is completion of Victoria-Rosenberg rail line and strengthening of Mexican peso, the latter increased foreign exchange gains 3,4. The below average expected earnings (Timeliness 4, safety 3 and technicals 4) give company a ‘B’ financial rating and restrict stock’s price stability at 45. However, positive projections for cash flow per share, EPS, net profit, ROE , reduced debt make the currently below average ranked stock a good investment at this price for buy and hold. Further, the grain shipment and auto production is improving in north America and so are the company’s financial prospects for 2012-145.
The competitors of KCS chosen here are Burlington Northern Santa Fe Corp (BNSF), Union Pacific (Corp (UNP) and Norfolk Southern Corp. These are also class 1 rail freight carriers6. According to a 2006 report, the BNSF and UNP had nearly 27% each the freight revenue while NSC had around 17% compared to 1.5 % (US operation only) of KCS 7,8,9,10. Though the company has a niche in its Mexico and panama lines where it is sitting secure for time being. Yet considering the competitors’ size and volume they handle, it has fierce competition in increasing its US share of freight revenue.