Kirby Corporation

Red hot commodities propelled this inland shipping company to a second straight record quarter.

Kirby Corporation (KEX) operates a fleet inland tank barges and towing vessels transporting bulk liquid products, specifically petrochemicals and refined petroleum products, throughout the Mississippi River System and the Gulf Coast Intracoastal Waterway.

Kirby also owns and operates four ocean-going barge and tug units transporting dry-bulk commodities in United States coastwise trade.

Kirby Beats Wall Street Estimates for the First Quarter

On Apr 23, the company, a Zacks #1 Rank (Strong Buy), reported first-quarter earnings that beat Wall Street estimates by a penny. It was the second record quarter in a row for KEX. Net income was $36.6 million, or 68 cents per share, compared to $24.4 million, or 46 cents per share in the first-quarter 2007.

Before the end of the quarter, on March 18, Kirby had raised guidance for the first quarter to exceed 66 cents per share. At the time, analysts estimates rose to match that forecast.

Revenues rose 21% to $330.6 million from $274.2 million in the year-ago period. Marine transportation revenues rose 25% compared with the first-quarter 2007. The company reported that the record results were caused by continued strong demand, higher contract and spot market rates, rate escalators on multi-year contracts and increased efficiencies from the continued improvement in vessel personnel and towboat availability.

Diesel engine services revenues also increased by 6% compared with 2007. Kirby saw continued strong demand for service work and parts sales in the medium-speed engine markets. The high-speed Gulf Coast market slowed due to seasonal softness in demand for diesel engine services to the oil service market.

Kirby is Bullish about 2008

The company said it expects the marine transportation business to remain strong in the second quarter and sees favorable conditions for the diesel engine services market. The company, however, sees an increase in delay days in the second quarter due to high water conditions on the Mississippi River System.

Kirby issued second quarter guidance in the range of 69 cents to 74 cents per share, a 23% to 32% increase compared with the second-quarter 2007.

KEX also raised its guidance for the full year to the range of $2.74 to $2.89 per share.

Analysts Raise Estimates for the Quarter and the Year

In response to the solid first-quarter earnings report and the company's guidance, brokerage analysts raised estimates for the second quarter and the full year. For the second quarter, estimates increased five cents to 73 cents from 67 cents per share, in line with the company's forecast.

For the full year, consensus estimates rose 15 cents to $2.90 from $2.75 per share, slightly higher than the company's guidance range.

Kirby's 2008 P/E is 19.33. Analysts expect year-over-year earnings growth of 26.54% in 2008. The company has an excellent five year average return on equity of 14.05%. KEX has also surprised on earnings four quarters in a row on average of 3.50%.

Read the full analyst report on KEX