BIGGEST LOSERS: Railroad operator Kansas City Southern fell the most in the S&P 500 index, plunging $18.43, or 16 percent, to $98.85 after its earnings fell short of what analysts’ forecasts.
http://finance.yahoo.com/news/fear-slowing-growth-pushes-down-182025606.html
The story does not say why KCS earnings fell short of projections.
Seems like it was pretty much a drop for Transportation stocks on this date, but Rails really seems to get more than their share of the down action at the close today (01/24/2014)
Here’s a graphic picture from this site: @ http://www.google.com/finance?cid=20484
|
KSU |
Kansas City Southern |
99.49 |
-17.79 |
-15.17% |
10.97B |
|
|
171.64 |
Keep watching…this may be a buying opportunity.
Remember: Buy low…Sell high.
Bob
I always wonder if this is a fault with the corporation not meeting the projections, or the projectors not doing a good projecting.
Yet KCS reported record revenue, a record operating ratio, and a 12% increase in earnings per share for 2013.
Guess thats no longer good enough for the modern economy.
Could be a good time to buy low.
Investors don’t make sense, nor feel they have to. If a company projects earnings and profits to be, say 25% more than last year and they earn 24% instead, they get punished just as much as if they stayed even. They appear to be a very fearful, insecure lot and these fears and insecurities cause all kinds of emotional economic and market figures. Plus, any profit is not enough, it has to be at least 12% in most instances and it has to match or exceed what was projected.
With roughly a 25% run up in stocks overall during 2013, the stocks were priced for perfection or, at least, the perception of it. Don’t meet those though standards, then the stock price will pay.
As they say, the stock market is the only place people run from when there is a sale!
Jay
KCS took a big hit in automobile transport, they handle a lot of the Volkswagen/Volvo transportation from the Port of Houston to most of the mid-west US, and imports for both were down this year.
If you buy a Volkswagen or a Volvo odds are it came off the boat in Houston before delivery to your dealer.
Grain also took a hit.
There is another factor at work here. The market had a huge run-up in 2013. Now is the time to take any gains and not have them show up on your 2013 taxes, especially if that would move you into a higher tax bracket.
John Timm
For the sake of clarity, the average profit margin of American corporations is under 10% and has been for decades.
John Timm
And coal, again. Yet KCS did improve earnings per share by 20 cents over a year ago, to $1.03. But they were expected to make $1.10 … so, sell this dog!
Those of you who follow Fred Frailey may recall his two items about the relative value of NS & KCS about six months ago. At the time KCS sold for about 24 times earnings while NS sold for about 12 times earnings. I suggest that KCS was overvalued. That suggests that KCS is likely to fall farther in percentage terms than NS in a down market.
The general market was down today. I see no reason to be surprised that KCS was a big looser on the day.
Mac
Let us reserve judgment. Granted KCS traffic may be down but what has that allowed ? ? KCS has appeared to look beyond the next quarter’s earnings to get into the long term. They certainly have ordered a lot of rolling stock. Maybe KCS had to write down some retirements ? ?
Another metric would be normal maintenance which would show up on present quarter and long term capital improvements where as retired older obsolete items might also had to be written down.
SAM1 your input would be most welcome.
Profit margin for corporation but that is not return on investment. Also back in the 70’s I was interviewing the manager of a stockbroker office and his assessment was that it wasn’t the dollar value of the up or down of the day but the percentage of the difference…at that time he said 6% was the major mark, especially down, in a time period of a day’s trading. Even if that holds true today, which is probably very low for today, today’s (Fri 1/24) was about 2% and the whole week just 2.52%…nowhere near ledge jumping numbers. At 6% (by today’s Dow of a rounded $16,500) drop would have to be $990 to be problematical. So 2.52% for the week is nothing to worry about. We are controlled by fear and ignorance: the fear and ignorance of the media and the fear and ignorance of ourselves.
Good point. Assuming knowledgeable investors, interest may have been inflated by the Mexican connection and by the possibility of a merger with CP. But the latter hasn’t happened yet, and recent developments in Lazaro Cardenas make one stockholder (me) wonder if expansion of that port will depend on the good will of, and partnership with, the drug lords.
Even after today’s blood bath, KCS stock is still worth almost three times what I paid for it 6 years ago.
Several years ago when BNSF decided that they would invest in double tracking the Trans-con, investors had a ‘cow’ and bad mouthed the obvious ‘waste’ of money that BNSF was spending and ran the stock price down - just to show what the ‘street investor’ knows.
Ask Warren Buffet how he profited from the Trans-con and the ‘Street Investors’!
Vision is a rare commodity!
Th thread that Capitalism system walks on is treacherous. Investors put money up and expect a return on that investment (i.e. stockholders). But the companies want and need the investment money and the profit to maintain and improve the property. We get investors–and managements–who have to pay off the stockholders before maintenance of equipment and property or purchase of new in hopes of attracting more investments. Other managements will ignore the stockholders and other investors by maintaining or expanding the plant with new infrastructure and machinery. It seems these latter guys often get bounced instead of praised and retained…they cost the stockholders too much money. It’s not just railroads, either. One of the things we must do in this country is control our capitalist system in a way that business and industry (and railroads) can meet current demands (maintain) and grow while appeasing the appetite of stockholders for instant and large returns on investment.
So we should turn yet another critical infrastructure over to the great and good socialists and get Metro North? Stupid is as stupid does.
Mac
Have your cake and eat it too? [?]
Well, what is capitalism? Investors put in money to make something happen and take a return on the investment. But then it is status quo and nothing happens and the likes of a railroad goes to hell in a handbasket until another investor comes along. On the other hand a management team who plows the profits into maintenance and improvements gets canned because he didn’t give the stockholders their return. So yes, it is having cake and eating it too. For both sides. But as for the remark about MNRR being socialistic the question is if private enterprise rather take the profits out of the entity, who is to pick up the tab for providing the service, especially if other means are more expensive? We are a socialist country in so many things private industry has forced us to provide. Private railroads are complaining about PTC, the costs. So if MNRR, or any passenger provider, needed PTC for safety and long term protection from accidents and loss of lives, equipment, and properties, do you believe they should do without? Do you think private enterprise investors would put up with paying for safety and long term protections? So American enterprises, including railroads, must not look at having the cake and eating it too but having the cake and the icing with capitalism filling the plate as needed. We don’t do that here. That’s why Japanese and other Asian steel was able to shut down the American steele industry.