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Kansas City Southern Raises Dividend by 23% Despite Q4 Miss

Kansas City Southern (KSU) is a freight rail transportation business that operates on a single coordinated rail network under one reportable business segment.

The company generates revenue by providing customers with freight delivery services both within its regions and throughout North America through connections with other Class I rail carriers. During the third quarter of 2020, the company generated 52% of its revenue in the United States and 48% of its revenue from Mexico.

These revenues came from a variety of different industries, including chemicals and petroleum (29%), industrial and consumer products (19%), agriculture and minerals (19%), intermodal (14%), energy (7%), automotive (7%) and other sources.

Q4 Earnings Fall Short of Estimates

Kansas City Southern reported fourth-quarter revenue that fell by 4.9% to $693.4 million, missing consensus estimates by $1.94 million, with non-GAAP earnings of $1.89 per share, missing consensus estimates by three cents.

Despite the earnings miss, several analysts weighed in favorably on the stock following its fourth-quarter results. BMO Capital’s Equity Research Analyst Fadi Chamoun, for instance, reiterated an Outperform rating and raised his price target from $215 to $240, saying that the results were strong given the unusual challenges posed during the quarter and expressing confidence in management.

The company raised its quarterly dividend by 22.7% to $0.54 per share, which represents a 1% forward yield. The dividend is payable on April 7, 2021 to shareholders on record as of March 8, 2021.

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