Intrinsic value of Kansas City Southern - KSU

Previous Close

$101.90

  Intrinsic Value

$9.72

stock screener

  Rating & Target

str. sell

-90%

  Value-price divergence*

-75%

Previous close

$101.90

 
Intrinsic value

$9.72

 
Up/down potential

-90%

 
Rating

str. sell

 
Value-price divergence*

-75%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of KSU stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 10.7

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -3.51
  15.30
  14.27
  13.34
  12.51
  11.76
  11.08
  10.47
  9.93
  9.43
  8.99
  8.59
  8.23
  7.91
  7.62
  7.36
  7.12
  6.91
  6.72
  6.55
  6.39
  6.25
  6.13
  6.01
  5.91
  5.82
  5.74
  5.67
  5.60
  5.54
  5.49
Revenue, $m
  2,334
  2,691
  3,075
  3,485
  3,921
  4,382
  4,868
  5,378
  5,912
  6,470
  7,051
  7,657
  8,287
  8,943
  9,624
  10,332
  11,068
  11,832
  12,627
  13,454
  14,314
  15,209
  16,141
  17,111
  18,123
  19,178
  20,279
  21,428
  22,628
  23,881
  25,191
Variable operating expenses, $m
 
  1,806
  2,063
  2,339
  2,631
  2,941
  3,267
  3,609
  3,967
  4,341
  4,731
  5,138
  5,561
  6,001
  6,458
  6,933
  7,427
  7,940
  8,473
  9,028
  9,605
  10,205
  10,830
  11,482
  12,161
  12,869
  13,607
  14,378
  15,183
  16,024
  16,903
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  1,516
  1,806
  2,063
  2,339
  2,631
  2,941
  3,267
  3,609
  3,967
  4,341
  4,731
  5,138
  5,561
  6,001
  6,458
  6,933
  7,427
  7,940
  8,473
  9,028
  9,605
  10,205
  10,830
  11,482
  12,161
  12,869
  13,607
  14,378
  15,183
  16,024
  16,903
Operating income, $m
  819
  885
  1,012
  1,147
  1,290
  1,442
  1,602
  1,769
  1,945
  2,129
  2,320
  2,519
  2,727
  2,942
  3,166
  3,399
  3,641
  3,893
  4,154
  4,426
  4,709
  5,004
  5,310
  5,630
  5,963
  6,310
  6,672
  7,050
  7,444
  7,857
  8,288
EBITDA, $m
  1,124
  1,237
  1,413
  1,602
  1,802
  2,014
  2,237
  2,471
  2,717
  2,973
  3,240
  3,518
  3,808
  4,109
  4,422
  4,748
  5,086
  5,437
  5,802
  6,182
  6,577
  6,988
  7,417
  7,863
  8,328
  8,812
  9,318
  9,846
  10,397
  10,973
  11,575
Interest expense (income), $m
  84
  81
  105
  131
  159
  189
  221
  254
  289
  325
  363
  403
  444
  487
  532
  579
  627
  677
  730
  784
  840
  899
  960
  1,024
  1,090
  1,159
  1,231
  1,307
  1,385
  1,467
  1,553
Earnings before tax, $m
  663
  805
  907
  1,015
  1,131
  1,253
  1,381
  1,516
  1,656
  1,803
  1,957
  2,116
  2,282
  2,455
  2,634
  2,821
  3,014
  3,216
  3,425
  3,642
  3,869
  4,105
  4,350
  4,606
  4,872
  5,150
  5,440
  5,743
  6,059
  6,390
  6,735
Tax expense, $m
  183
  217
  245
  274
  305
  338
  373
  409
  447
  487
  528
  571
  616
  663
  711
  762
  814
  868
  925
  983
  1,045
  1,108
  1,175
  1,244
  1,316
  1,391
  1,469
  1,551
  1,636
  1,725
  1,818
Net income, $m
  478
  587
  662
  741
  825
  914
  1,008
  1,106
  1,209
  1,316
  1,428
  1,545
  1,666
  1,792
  1,923
  2,059
  2,200
  2,347
  2,500
  2,659
  2,824
  2,996
  3,176
  3,362
  3,557
  3,760
  3,971
  4,192
  4,423
  4,665
  4,917

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  171
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  8,818
  9,967
  11,389
  12,909
  14,524
  16,231
  18,030
  19,919
  21,896
  23,962
  26,116
  28,359
  30,694
  33,122
  35,645
  38,267
  40,992
  43,824
  46,768
  49,829
  53,014
  56,329
  59,780
  63,375
  67,123
  71,030
  75,107
  79,362
  83,806
  88,448
  93,299
Adjusted assets (=assets-cash), $m
  8,647
  9,967
  11,389
  12,909
  14,524
  16,231
  18,030
  19,919
  21,896
  23,962
  26,116
  28,359
  30,694
  33,122
  35,645
  38,267
  40,992
  43,824
  46,768
  49,829
  53,014
  56,329
  59,780
  63,375
  67,123
  71,030
  75,107
  79,362
  83,806
  88,448
  93,299
Revenue / Adjusted assets
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
Average production assets, $m
  7,888
  9,096
  10,394
  11,781
  13,254
  14,813
  16,454
  18,178
  19,982
  21,867
  23,833
  25,881
  28,011
  30,227
  32,530
  34,923
  37,409
  39,994
  42,680
  45,474
  48,381
  51,406
  54,555
  57,836
  61,256
  64,822
  68,543
  72,426
  76,481
  80,717
  85,145
Working capital, $m
  -96
  -70
  -80
  -91
  -102
  -114
  -127
  -140
  -154
  -168
  -183
  -199
  -215
  -233
  -250
  -269
  -288
  -308
  -328
  -350
  -372
  -395
  -420
  -445
  -471
  -499
  -527
  -557
  -588
  -621
  -655
Total debt, $m
  2,478
  3,003
  3,752
  4,553
  5,404
  6,304
  7,252
  8,247
  9,289
  10,378
  11,513
  12,695
  13,926
  15,205
  16,535
  17,917
  19,353
  20,845
  22,397
  24,010
  25,688
  27,435
  29,254
  31,149
  33,124
  35,183
  37,331
  39,574
  41,916
  44,362
  46,919
Total liabilities, $m
  4,728
  5,253
  6,002
  6,803
  7,654
  8,554
  9,502
  10,497
  11,539
  12,628
  13,763
  14,945
  16,176
  17,455
  18,785
  20,167
  21,603
  23,095
  24,647
  26,260
  27,938
  29,685
  31,504
  33,399
  35,374
  37,433
  39,581
  41,824
  44,166
  46,612
  49,169
Total equity, $m
  4,090
  4,714
  5,387
  6,106
  6,870
  7,677
  8,528
  9,422
  10,357
  11,334
  12,353
  13,414
  14,518
  15,667
  16,860
  18,100
  19,389
  20,729
  22,121
  23,569
  25,076
  26,643
  28,276
  29,977
  31,749
  33,597
  35,526
  37,538
  39,640
  41,836
  44,130
Total liabilities and equity, $m
  8,818
  9,967
  11,389
  12,909
  14,524
  16,231
  18,030
  19,919
  21,896
  23,962
  26,116
  28,359
  30,694
  33,122
  35,645
  38,267
  40,992
  43,824
  46,768
  49,829
  53,014
  56,328
  59,780
  63,376
  67,123
  71,030
  75,107
  79,362
  83,806
  88,448
  93,299
Debt-to-equity ratio
  0.606
  0.640
  0.700
  0.750
  0.790
  0.820
  0.850
  0.880
  0.900
  0.920
  0.930
  0.950
  0.960
  0.970
  0.980
  0.990
  1.000
  1.010
  1.010
  1.020
  1.020
  1.030
  1.030
  1.040
  1.040
  1.050
  1.050
  1.050
  1.060
  1.060
  1.060
Adjusted equity ratio
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473
  0.473

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  478
  587
  662
  741
  825
  914
  1,008
  1,106
  1,209
  1,316
  1,428
  1,545
  1,666
  1,792
  1,923
  2,059
  2,200
  2,347
  2,500
  2,659
  2,824
  2,996
  3,176
  3,362
  3,557
  3,760
  3,971
  4,192
  4,423
  4,665
  4,917
Depreciation, amort., depletion, $m
  305
  351
  401
  455
  512
  572
  635
  702
  772
  844
  920
  999
  1,082
  1,167
  1,256
  1,348
  1,444
  1,544
  1,648
  1,756
  1,868
  1,985
  2,106
  2,233
  2,365
  2,503
  2,646
  2,796
  2,953
  3,116
  3,287
Funds from operations, $m
  946
  939
  1,063
  1,196
  1,337
  1,486
  1,643
  1,808
  1,981
  2,161
  2,349
  2,544
  2,748
  2,959
  3,179
  3,407
  3,645
  3,892
  4,148
  4,415
  4,692
  4,981
  5,282
  5,595
  5,922
  6,263
  6,618
  6,989
  7,376
  7,781
  8,204
Change in working capital, $m
  33
  -9
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -29
  -30
  -31
  -33
  -34
Cash from operations, $m
  913
  948
  1,073
  1,207
  1,349
  1,498
  1,656
  1,821
  1,995
  2,175
  2,364
  2,560
  2,764
  2,976
  3,197
  3,426
  3,664
  3,911
  4,169
  4,436
  4,715
  5,004
  5,306
  5,620
  5,948
  6,290
  6,647
  7,019
  7,407
  7,814
  8,238
Maintenance CAPEX, $m
  0
  -305
  -351
  -401
  -455
  -512
  -572
  -635
  -702
  -772
  -844
  -920
  -999
  -1,082
  -1,167
  -1,256
  -1,348
  -1,444
  -1,544
  -1,648
  -1,756
  -1,868
  -1,985
  -2,106
  -2,233
  -2,365
  -2,503
  -2,646
  -2,796
  -2,953
  -3,116
New CAPEX, $m
  -591
  -1,208
  -1,298
  -1,387
  -1,474
  -1,558
  -1,642
  -1,723
  -1,804
  -1,885
  -1,966
  -2,048
  -2,131
  -2,215
  -2,303
  -2,393
  -2,487
  -2,584
  -2,687
  -2,794
  -2,906
  -3,025
  -3,150
  -3,281
  -3,420
  -3,566
  -3,720
  -3,883
  -4,055
  -4,236
  -4,427
Cash from investing activities, $m
  -628
  -1,513
  -1,649
  -1,788
  -1,929
  -2,070
  -2,214
  -2,358
  -2,506
  -2,657
  -2,810
  -2,968
  -3,130
  -3,297
  -3,470
  -3,649
  -3,835
  -4,028
  -4,231
  -4,442
  -4,662
  -4,893
  -5,135
  -5,387
  -5,653
  -5,931
  -6,223
  -6,529
  -6,851
  -7,189
  -7,543
Free cash flow, $m
  285
  -565
  -576
  -581
  -580
  -572
  -557
  -537
  -512
  -481
  -447
  -408
  -366
  -321
  -273
  -223
  -171
  -117
  -62
  -5
  52
  112
  172
  233
  295
  359
  423
  489
  556
  624
  694
Issuance/(repayment) of debt, $m
  73
  696
  750
  801
  851
  900
  948
  995
  1,042
  1,089
  1,135
  1,182
  1,230
  1,279
  1,330
  1,382
  1,436
  1,492
  1,551
  1,613
  1,678
  1,747
  1,819
  1,895
  1,975
  2,059
  2,148
  2,242
  2,342
  2,446
  2,557
Issuance/(repurchase) of shares, $m
  -185
  37
  11
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -108
  733
  761
  801
  851
  900
  948
  995
  1,042
  1,089
  1,135
  1,182
  1,230
  1,279
  1,330
  1,382
  1,436
  1,492
  1,551
  1,613
  1,678
  1,747
  1,819
  1,895
  1,975
  2,059
  2,148
  2,242
  2,342
  2,446
  2,557
Total cash flow (excl. dividends), $m
  177
  168
  184
  219
  271
  328
  391
  458
  530
  607
  689
  774
  864
  958
  1,057
  1,159
  1,265
  1,375
  1,489
  1,608
  1,731
  1,858
  1,991
  2,128
  2,270
  2,418
  2,572
  2,732
  2,898
  3,071
  3,251
Retained Cash Flow (-), $m
  -176
  -624
  -673
  -719
  -764
  -808
  -851
  -893
  -935
  -977
  -1,019
  -1,061
  -1,104
  -1,148
  -1,193
  -1,240
  -1,289
  -1,340
  -1,393
  -1,448
  -1,506
  -1,568
  -1,632
  -1,701
  -1,772
  -1,848
  -1,928
  -2,013
  -2,102
  -2,196
  -2,295
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  -456
  -488
  -499
  -493
  -480
  -460
  -435
  -405
  -370
  -330
  -287
  -240
  -190
  -137
  -82
  -24
  35
  97
  160
  224
  291
  358
  427
  498
  570
  643
  719
  796
  875
  956
Discount rate, %
 
  5.70
  5.99
  6.28
  6.60
  6.93
  7.27
  7.64
  8.02
  8.42
  8.84
  9.28
  9.75
  10.24
  10.75
  11.29
  11.85
  12.44
  13.06
  13.72
  14.40
  15.12
  15.88
  16.67
  17.51
  18.38
  19.30
  20.27
  21.28
  22.34
  23.46
PV of cash for distribution, $m
 
  -432
  -435
  -416
  -382
  -343
  -302
  -260
  -218
  -179
  -142
  -108
  -79
  -53
  -33
  -16
  -4
  5
  11
  14
  15
  15
  14
  12
  10
  8
  7
  5
  4
  3
  2
Current shareholders' claim on cash, %
  100
  99.7
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6
  99.6

Kansas City Southern (KCS) is a holding company. The Company has domestic and international rail operations in North America that are focused on the north/south freight corridor connecting commercial and industrial markets in the central United States with industrial cities in Mexico. The Company's subsidiaries include The Kansas City Southern Railway Company (KCSR) and Kansas City Southern de Mexico, S.A. de C.V. (KCSM). KCSR serves a 10-state region in the midwest and southeast regions of the United States and has the north/south rail route between Kansas City, Missouri and various ports along the Gulf of Mexico in Alabama, Louisiana, Mississippi and Texas. KCSM operates a corridor of the Mexican railroad system. KCSM's rail lines provide rail access to the United States and Mexico border crossing at Nuevo Laredo, Tamaulipas. KCSM also provides rail access to the Port of Lazaro Cardenas on the Pacific Ocean.

FINANCIAL RATIOS  of  Kansas City Southern (KSU)

Valuation Ratios
P/E Ratio 22.7
Price to Sales 4.7
Price to Book 2.7
Price to Tangible Book
Price to Cash Flow 11.9
Price to Free Cash Flow 33.7
Growth Rates
Sales Growth Rate -3.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -29%
Cap. Spend. - 3 Yr. Gr. Rate -6%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 55.6%
Total Debt to Equity 60.6%
Interest Coverage 9
Management Effectiveness
Return On Assets 6.3%
Ret/ On Assets - 3 Yr. Avg. 8.9%
Return On Total Capital 7.4%
Ret/ On T. Cap. - 3 Yr. Avg. 10.6%
Return On Equity 11.9%
Return On Equity - 3 Yr. Avg. 17.1%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 65.3%
Gross Margin - 3 Yr. Avg. 63.4%
EBITDA Margin 45.1%
EBITDA Margin - 3 Yr. Avg. 42.8%
Operating Margin 35%
Oper. Margin - 3 Yr. Avg. 33%
Pre-Tax Margin 28.4%
Pre-Tax Margin - 3 Yr. Avg. 28%
Net Profit Margin 20.5%
Net Profit Margin - 3 Yr. Avg. 20%
Effective Tax Rate 27.6%
Eff/ Tax Rate - 3 Yr. Avg. 28.3%
Payout Ratio 29.9%

KSU stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the KSU stock intrinsic value calculation we used $2334 million for the last fiscal year's total revenue generated by Kansas City Southern. The default revenue input number comes from 2016 income statement of Kansas City Southern. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our KSU stock valuation model: a) initial revenue growth rate of 15.3% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 5.7%, whose default value for KSU is calculated based on our internal credit rating of Kansas City Southern, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Kansas City Southern.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of KSU stock the variable cost ratio is equal to 67.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for KSU stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Kansas City Southern.

Corporate tax rate of 27% is the nominal tax rate for Kansas City Southern. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the KSU stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for KSU are equal to 338%.

Life of production assets of 25.9 years is the average useful life of capital assets used in Kansas City Southern operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for KSU is equal to -2.6%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $4090 million for Kansas City Southern - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 105.203 million for Kansas City Southern is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Kansas City Southern at the current share price and the inputted number of shares is $10.7 billion.

RELATED COMPANIES Price Int.Val. Rating
UNP Union Pacific 112.09 62.62  sell
GWR Genesee&Wyomin 71.39 36.11  sell
CSX CSX 52.84 15.17  str.sell
NSC Norfolk Southe 129.80 27.07  str.sell
CNI Canadian Natio 80.23 20.97  str.sell
CP Canadian Pacif 168.46 65.16  str.sell

COMPANY NEWS

▶ Last Week with Kansas City Southern: What Pushed Volumes?   [Oct-13-17 05:06PM  Market Realist]
▶ How CSX Stock Has Performed This Year   [Oct-11-17 10:49AM  Market Realist]
▶ Kansas City Southern, The Growth Stock   [Oct-10-17 10:57AM  Benzinga]
▶ Behind Kansas City Southerns Rising Shipments in Week 39   [Oct-09-17 09:12AM  Market Realist]
▶ Yahoo Finance Live: Midday Movers - Oct 4th, 2017   [Oct-04-17 09:40AM  Yahoo Finance Video]
▶ US Rail Freight Volumes for Week 38 Show a Mixed Bag   [Sep-29-17 11:02AM  Market Realist]
▶ [$$] We Fix a Railroad Dividend Ranking   [Sep-25-17 12:01AM  Barrons.com]
▶ How Harvey Affected Kansas City Southern   [Sep-21-17 10:36AM  Market Realist]
▶ Analysts Post-Hurricane Views on US Railroads   [07:38AM  Market Realist]
▶ US Railroads: Have the Hurricanes Affected Their Valuation?   [Sep-20-17 10:38AM  Market Realist]
▶ Why Kansas City Southerns Freight Volumes Fell in Week 36   [Sep-19-17 10:38AM  Market Realist]
▶ Week 36: Hurricanes Overshadow US Rail Freight Traffic   [Sep-18-17 02:38PM  Market Realist]
▶ What Analysts Recommend for US Railroads   [10:37AM  Market Realist]
▶ How US Railroads Operating Margin Growth Stacked Up in 2Q17   [Sep-15-17 07:37AM  Market Realist]
▶ This US Railroad Saw Highest Rise in Coal Revenue in 2Q17   [Sep-14-17 09:09AM  Market Realist]
▶ How Major US Railroads Have Performed in 2017 So Far   [Sep-13-17 04:38PM  Market Realist]
▶ Kansas City Southern and Hurricane Harvey in Week 35   [Sep-11-17 10:37AM  Market Realist]
▶ The 6 Best Dividend Stocks in the Railroad Industry   [Sep-05-17 09:02PM  Motley Fool]
▶ Kansas City Southern: What Led Volume Rise in Week 34?   [Sep-04-17 09:07AM  Market Realist]
▶ Harvey's impact on the trucking industry   [12:21PM  CNBC Videos]
▶ Hurricane leaves KC Southern, YRC on hold   [10:05AM  American City Business Journals]
▶ Midnight CSX trains arent going anywhere   [Aug-23-17 01:01PM  Yahoo Finance Video]
▶ "Fast Money" final trades: AAPL, EWW and more   [Aug-22-17 05:59PM  CNBC Videos]
▶ This Railroad Wants to Give You Part of $800 Million   [Aug-16-17 10:41AM  TheStreet.com]
▶ Genesee & Wyomings European Revenues in 2Q17   [08:08AM  Market Realist]
▶ Kansas City Southern tops Street 2Q forecasts   [Jul-21-17 08:55PM  Associated Press]
Financial statements of KSU
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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