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Here's Why You Should Hold on to Kirby (KEX) Stock Now
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Kirby Corporation’s (KEX - Free Report) prospects are being aided by robust top-line expansion, driven by increased demand in the distribution and services segment. The buoyant market conditions support the marine transportation unit’s performance. However, the coastal market's weakness and elevated capital costs could be concerning.
Factors Favoring KEX
Reflecting the strong performance of the distribution and services segment, Kirby's fourth-quarter 2023 segmental revenues rose by 12.7% to $346.6 million, driven by increased demand. Oil and gas contributed 43% to revenues, with the operating margin improving to 8.3% in the final quarter of 2023 from 5.5% a year ago. For 2024, segmental revenues are expected to be flat to slightly down.
Meanwhile, in the fourth quarter of 2023, KEX's marine and transportation unit reported a 7% increase in revenues to $452.59 million, with the operating margin improving to 15.1% from 11.1% year over year. The outlook for 2024 is optimistic, with anticipated increases in inland revenues in the mid to high single digits and coastal revenues in the high single to low double digits. Operating margins are expected to average around 20% for inland and mid to high single digits for coastal operations.
Kirby's operating cash flow surged from $294.1 million in 2022 to $540.2 million in 2023. The company expects the metric in 2024 to be in the $600-$700 million range.
Key Risks
In the fourth quarter of 2023, Kirby faced a 7% decline in coastal market revenues (18% of marine transportation), attributed to planned shipyard maintenance days.
Kirby's liquidity is a concern, as evidenced by a decrease in cash and equivalents from $42.1 million to $32.57 million as of Dec 31, 2023. Additionally, a total debt reduction from $1,067.9 million to $1,016.59 million raises questions about the company's financial stability.
GATX has an encouraging track record with respect to the earnings surprise, having surpassed the Zacks Consensus Estimate in three of the last four quarters (missing the mark in the remaining one). The average beat is 16.47%.
The Zacks Consensus Estimate for 2024 earnings has been revised 6.1% upward over the past 90 days. GATX has an expected earnings growth rate of 3.7% for 2024. Shares of GATX have risen 19.5% in the past year.
SkyWest's fleet modernization efforts are commendable. The Zacks Consensus Estimate for SKYW’s 2024 earnings has improved 11.1% over the past 90 days. Shares of SKYW have surged 222.1% in the past year.
SKYW has an expected earnings growth rate of more than 100% for 2024. SKYW delivered a trailing four-quarter earnings surprise of 128.02%, on average.
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Here's Why You Should Hold on to Kirby (KEX) Stock Now
Kirby Corporation’s (KEX - Free Report) prospects are being aided by robust top-line expansion, driven by increased demand in the distribution and services segment. The buoyant market conditions support the marine transportation unit’s performance. However, the coastal market's weakness and elevated capital costs could be concerning.
Factors Favoring KEX
Reflecting the strong performance of the distribution and services segment, Kirby's fourth-quarter 2023 segmental revenues rose by 12.7% to $346.6 million, driven by increased demand. Oil and gas contributed 43% to revenues, with the operating margin improving to 8.3% in the final quarter of 2023 from 5.5% a year ago. For 2024, segmental revenues are expected to be flat to slightly down.
Meanwhile, in the fourth quarter of 2023, KEX's marine and transportation unit reported a 7% increase in revenues to $452.59 million, with the operating margin improving to 15.1% from 11.1% year over year. The outlook for 2024 is optimistic, with anticipated increases in inland revenues in the mid to high single digits and coastal revenues in the high single to low double digits. Operating margins are expected to average around 20% for inland and mid to high single digits for coastal operations.
Kirby's operating cash flow surged from $294.1 million in 2022 to $540.2 million in 2023. The company expects the metric in 2024 to be in the $600-$700 million range.
Key Risks
In the fourth quarter of 2023, Kirby faced a 7% decline in coastal market revenues (18% of marine transportation), attributed to planned shipyard maintenance days.
Kirby's liquidity is a concern, as evidenced by a decrease in cash and equivalents from $42.1 million to $32.57 million as of Dec 31, 2023. Additionally, a total debt reduction from $1,067.9 million to $1,016.59 million raises questions about the company's financial stability.
Zacks Rank
KEX currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked stocks for investors’ consideration from the Zacks Transportation sector include GATX Corporation (GATX - Free Report) and Skywest (SKYW - Free Report) . Each stock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
GATX has an encouraging track record with respect to the earnings surprise, having surpassed the Zacks Consensus Estimate in three of the last four quarters (missing the mark in the remaining one). The average beat is 16.47%.
The Zacks Consensus Estimate for 2024 earnings has been revised 6.1% upward over the past 90 days. GATX has an expected earnings growth rate of 3.7% for 2024. Shares of GATX have risen 19.5% in the past year.
SkyWest's fleet modernization efforts are commendable. The Zacks Consensus Estimate for SKYW’s 2024 earnings has improved 11.1% over the past 90 days. Shares of SKYW have surged 222.1% in the past year.
SKYW has an expected earnings growth rate of more than 100% for 2024. SKYW delivered a trailing four-quarter earnings surprise of 128.02%, on average.