Dale:
Good to see you back again.
Several points.
1. There are a few methods of computing PE. One is the price/earnings for the last fiscal year. Another is the TTM (trailing twelve months) and the third is Future PE, based on what the analyst forecasts the earnings are to be. For instance, Morningstar is the analyst I use. They show forward PE and have KSU at 36,8, CN at 14.8 and UP at 15.5.
2. Stock prices are not tied to their PE ratio, or their earnings. The stock prices are simply based on supply and demand. It is a bid/offer system. The marketplace has determined that KSU is worth $28.37 per share right now. People are willing to buy (and sell) at that price. Now, given that...PE is one of the factors that investors or speculators use to determine a fair value for the stock. It is a quick guideline, but should not be used as the only method.
3. For instance...a common guideline is PB or price to book. Right now KSU is at 1.4 x book value. CN is 2.0 as is UP. In other words, investors are willing to pay 2x the accounting value of CN or UP. They consider the value of the company to be higher than the value of the assets less liabilities. Dont confuse company value and asset value.
4. Now, lets say that KSU had a PE ratio of say...16, which seems to be similar to the other rails. That would place it's PB ratio at around .53. Math (16/41.7 x 1.4...I took the "industry average PE and applied it to the book value of KSU). At 53 cents on the dollar, speculators would swoop in and buy the assets, in order to liquidate the property.
So, the price of the stock is being held higher for reasons only the market understands, but my quick anaylsis is that KSU is a valuable piece of real estate and a very valuable railroad. Think about what the Meridian Speedway would gather on the open market.
I have no clue as to the value of their Kansas City - Shreveport line, others here who have skin in the game, either industrial or cash, can provide that answer. But, to me, the flow of east west intermodal traffic makes the Speedway valuable and keeps the price high.
KSU is not a great company to own for return of investment. It throws no dividends to the owners and has a very high level of debt. Further, it has carved a route to Mexico on OPT (other people's tracks) and is therefore subject to political and industrial influences.
However, it does have a "route " to Mexico. It does have a highly desired route connecting Pacific Rim countries with the Southeastern United States (the Speedway).
Probably as much as anything, investors are considering the buyout price of KSU....and that keeps it's price high.
Ed