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Kansas City Southern's Profit Warning Is Sparking A Railroad Sell-Off

Kansas City Southern's Profit Warning Is Sparking A Railroad Sell-Off
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Kansas City Southern (NYSE: KSU)'s profit warning Monday -- which called for lower-than-expected car load volume related to the energy industry -- started a sell-off for several peer railroad companies.

Kansas City, which also cited a weaker Mexican peso for weaker outlook, fell more than 6 percent to $108.39 recently.

Union Pacific Corporation (NYSE: UNP) dropped 2.6 percent to $114.41 while CSX Corporation (NYSE: CSX) declined more than 2 percent to $44.40.

Norfolk Southern Corp. (NYSE: NSC) and Canadian Pacific Railway Limited (USA) (NYSE: CP) each fell more than 1 percent.

Kansas City serves the mid-western U.S. and links the commercial and industrial centers of the U.S., Mexico and Canada.

The company predicted flat to slightly higher first-quarter earnings, on flat revenue. Results are expected April 21.

Related Link: Oil Train Derailments Muddy Railroad Sector Earnings

For 2015, Kansas City now expects low single-digit revenue growth, down from the mid single-digits predicted in January 2015.

Volume from Kansas City's energy commodity group will grow in the single digits, down from its earlier prediction of double digit growth. Growth predictions for the company's other commodity groups are unchanged.

CSX, with operations focused on eastern North America, is slated to post first-quarter results April 15.

Union Pacific, concentrated in the western U.S. with links to Canada and Mexico, will post fourth-quarter results April 22.

Two rail companies will report on April 21: Norfolk Southern, a major coal transporter with links to East Coast ports and Calgary-based Canadian Pacific, which operates in both the U.S. and Canada and has links to Canada's oil fields.

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