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Kirby (KEX) Down 3.7% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Kirby (KEX - Free Report) . Shares have lost about 3.7% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Kirby due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Earnings Beat at Kirby in Q1

Kirby’s first-quarter 2019 adjusted earnings of 74 cents per share surpassed the Zacks Consensus Estimate of 72 cents. The bottom line also improved year over year. Results were aided by higher revenues.

Moreover, total revenues of $745 million outpaced the Zacks Consensus Estimate of $722 million and rose marginally year over year as well. The top line was driven by increased sales at the marine transportation division.

Segmental Performance

Revenues at the marine transportation unit inched up 8.1% to $368.12 million. Segmental operating income skyrocketed more than 100% to $35.4 million. Segmental operating margin expanded to 9.6% from 4.8% a year ago.

Inland market revenues increased approximately 12% year over year owing to contributions from last year’s acquisitions and a favorable pricing. The operating margin for the inland business was in the low to mid-double digits.

Revenues at the coastal market decreased slightly on a year-on-year basis due to increased shipyard days on a number of large vessels and effects from bad weather conditions on the Gulf Coast. However, the coastal operating loss reduced year over year on account of better pricing and lower costs implemented last year.

Distribution and services revenues decreased 6.2% to $376.5 million due to below-par performance in the oil and gas market.  Operating income at the segment inched up 1.6% to $37.6 million in the reported quarter. Operating margin was 10% compared with 9.2% a year ago. Segmental operating margin improved as a result of new equipment sales in the oil and gas manufacturing business as well as lower costs.

Revenues and operating income in the manufacturing business fell year over year on reduced new pressure pumping unit and equipment deliveries. Operating margin for the oil and gas market was in the low double-digits’ range.

Revenues and operating income in the commercial and industrial market augmented on a year-over-year basis, buoyed by higher demandfor diesel engines, parts and service in marine business in the Gulf Coast, Midwest and Florida. Also, revenues and operating income in the power generation market ascended owing to higher demand for back-up power systems. Operating margin for the commercial and industrial market was in the mid-to-high single digits during the quarter.

Balance Sheet Highlights

Long-term debt at Kirby (including the current portion) increased to $1,667.47 million at the end of the first quarter of 2019 from $1,423.29 million at the end of first-quarter 2018. Debt to capitalization ratio at the end of the first quarter was 33.8% compared with 31.2% a year ago.

Outlook

The company reaffirms its earnings guidance for the full year in the range of $3.25-$3.75 per share.

How Have Estimates Been Moving Since Then?

Fresh estimates followed a downward path over the past two months.

VGM Scores

Currently, Kirby has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Kirby has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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