Kansas City Southern Stock Analysis


Kansas City Southern Stock Analysis

Business Description:

Kansas City Southern Stock Analysis

Catalysts:

  • ● Recovery from pandemic and recession with expected higher inflation

  • ● Massive infrastructure investment from the Federal Government, especially in cleaner mode of transportation such as railroads

  • ● Deal with Canadian National Railroad could open business in Canada, along with existing businesses in the US and Mexico → big winner of USMCA Deal

  • ● Initial offer from Canadian Pacific Railroad turned down after a better offer from CN

  • ● Each KSU share to be converted into 1.129 shares of CN and $200 in cash

  • ● Arbitrage spread of about 10%

Kansas City Southern Stock Analysis

Risks:

  • ● Will need approval from regulators in 3 countries

  • ● Higher than expected synergy costs

Financial Analysis:

  • ● Revenues of $2.62 Billion in FY20 down from $2.86 Billion in FY19

  • ● Operating income of $1.03 Billion in FY20 vs $1.05 Billion in FY19

  • ● Net income of $617 million in FY20 vs $359 million in FY19

  • ● Free Cash flow of $590 million in FY20 vs $478 million for FY19

  • ● Balance Sheet

  • ○ Total assets: $10.2 Billion ; total liabilities: $5.63 Billion; book value: $4.24 Billion

  • ○ Cash: $260 million, debts: $3.81 Billion, current assets: $723 million, current liabilities: $483 million


Read the full analysis here: https://ishfaaqpeerally.teachable.com/courses/662813/lectures/32724420

Kansas City Southern Stock Analysis

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