Kansas City Southern 3Q net income falls 9.8 pct

KANSAS CITY, Mo. -- Kansas City Southern said Friday that its third-quarter net income fell 9.8 percent, hurt by tough comparisons to a prior-year period boosted by a hefty one-time gain.

The Kansas City, Mo.-based railroad earned $90 million, or 82 cents per share, down from $99.8 million, or 91 cents per share, in the same quarter last year.

The 2011 quarter included a gain of 15 cents per share related to insurance recoveries, which was partially offset by 2 cents per share in debt-retirement costs. The recent quarter didn't contain any one-time items.

Revenue rose 6 percent to $577.4 million from $544.5 million.

The results fell slightly short of Wall Street predictions. Analysts, on average, expected a profit of 84 cents per share on $578.1 million in revenue, according to a FactSet poll.

Automotive revenue jumped 31 percent to $48.2 million, while intermodal grew 25 percent to $82 million and energy-related revenue increased 8 percent to $89.3 million. The total number of carloads rose 7 percent.

Citi Investment Research analyst Christian Wetherbee said the lower-than-expected profit was partially a result of changes in the value of the Mexican peso, which increased the company's tax rate to 45 percent from 30 percent in the year-ago period.

Wetherbee backed his "Buy" rating for the railroad and raised his price target by $11 to $93. He said that a rebound in grain shipping in the second half of next year, coupled with an expected increase in automotive demand and expanded intermodal shipping will result in earnings-per-share growth that will outpace the company's competitors.

Kansas City Southern shares rose $1.02 to $78.40 in afternoon trading.