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Reasons to Add World Fuel Services to Your Portfolio Now
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Shares of World Fuel Services are likely to display an uptrend on the back of its impressive earnings performance this year and robust key end markets.
In the past six months, the stock has surged 34.8% against the 21.2 % decline of the industry it belongs to.
Let’s take a look into the factors why World Fuel Services has enough momentum to continue forward:
Growth Driver
This one of the leading fuel suppliers in the three main transportation segments, namely marine, aviation and land recently announced that it will buy Universal Weather and Aviation’s UVair fuel business worth of $170 million. As both companies are core fuel suppliers, the UVair acquisition will complement World Fuel Services’ aviation operations and also share a few customers in common. The company’s agreement to acquire the UVair fuel division from Universal Weather requires the latter to work closely with the former for supplying fuel to their common clients. Being in similar business and sharing some of the airports, the two companies’ collaboration is anticipated to be less risk-prone with higher chances of outperformance.
The Miami-based global provider of fuel logistics projects a sequential increase in gross profit at the marine segment owing to seasonal activity. Further, the company is set to experience a sequential improvement in Kinetic, retail, commercial and industrial business activities during the third quarter.
These growth drivers lend World Fuel Services a dominant share in the fuel market, especially in the United States.
Estimate Revisions
Annual estimates for World Fuel Services have moved north over the past two months, reflecting analysts’ confidence in the stock. For 2019, we have seen two estimates being revised upward in the past 60 days compared with one downward revision. This has led the Zacks Consensus Estimate to trend higher, rising from $2.33 per share, which was two months ago, to its current level of $2.34. Over this period, the Zacks Consensus Estimate for 2020 has been raised around 7.4% to $2.92 per share with three estimates treading northward.
Upbeat Q2 Performance
World Fuel Services delivered adjusted earnings per share of 58 cents in second-quarter 2019, marking a 23.4% year-over-year improvement. Moreover, the figure beat the Zacks consensus estimate by 7.4%. This earnings improvement is primarily attributable to a heightened focus on segmenting and satisfying demand that ensures greater value to customers, which was achieved by concentrating on ramping up fuel deliveries in specific geographies where customers are experiencing supply crisis.
World Fuel Services’ adjusted EBITDA for the second quarter rose 17% to $98 million.
Further, the company generated operating cash flow of $125 million and hiked its dividend by 66% through the repurchase of common stocks worth $65 million.
Healthy EPS Projections
The Zacks Consensus Estimate for World Fuel Services’ 2019 earnings is currently pegged at $2.34, suggesting growth of 10.90% from the year-ago reported figure. The same for 2020 is pegged at $2.92, indicating a year-over-year improvement of almost 25% from the prior-year number.
Positive Earnings Surprise History
World Fuel Services outpaced the Zacks Consensus Estimate in all the trailing four quarters, the average being 16.43%.
World Fuel Services Corporation Price and EPS Surprise
In the second quarter, the company generated cash and cash equivalents worth $218.1 million. It’s debt to capitalization ratio was 27%.
Following its reduction of debt burden, the company managed to lower its net debt to adjusted EBITDA ratio to 1.2 times, down from 1.9 times in the comparable quarter last year.
Zacks Rank & Other Key Picks
World Fuel Services currently has a Zacks Rank #2 (Buy) and a VGM Score of B. Our research shows that stocks with an impressive VGM Score of A or B combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best investment opportunities. Other top-ranked players in the energy space include Enbridge Inc. (ENB - Free Report) , Dril-Quip, Inc. (DRQ - Free Report) and BP Midstream Partners , each holding the same solid Zacks Rank of 2 as World Fuel Services. You can see the complete list of today’s Zacks #1 Rank stocks here.
Enbridge’s earnings beat the Zacks Consensus Estimate in three of the last four quarters.
Dril-Quip’s earnings beat the Zacks Consensus Estimate in three of the previous four quarters.
BP Midstream’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters.
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Reasons to Add World Fuel Services to Your Portfolio Now
Shares of World Fuel Services are likely to display an uptrend on the back of its impressive earnings performance this year and robust key end markets.
In the past six months, the stock has surged 34.8% against the 21.2 % decline of the industry it belongs to.
Let’s take a look into the factors why World Fuel Services has enough momentum to continue forward:
Growth Driver
This one of the leading fuel suppliers in the three main transportation segments, namely marine, aviation and land recently announced that it will buy Universal Weather and Aviation’s UVair fuel business worth of $170 million. As both companies are core fuel suppliers, the UVair acquisition will complement World Fuel Services’ aviation operations and also share a few customers in common. The company’s agreement to acquire the UVair fuel division from Universal Weather requires the latter to work closely with the former for supplying fuel to their common clients. Being in similar business and sharing some of the airports, the two companies’ collaboration is anticipated to be less risk-prone with higher chances of outperformance.
The Miami-based global provider of fuel logistics projects a sequential increase in gross profit at the marine segment owing to seasonal activity. Further, the company is set to experience a sequential improvement in Kinetic, retail, commercial and industrial business activities during the third quarter.
These growth drivers lend World Fuel Services a dominant share in the fuel market, especially in the United States.
Estimate Revisions
Annual estimates for World Fuel Services have moved north over the past two months, reflecting analysts’ confidence in the stock. For 2019, we have seen two estimates being revised upward in the past 60 days compared with one downward revision. This has led the Zacks Consensus Estimate to trend higher, rising from $2.33 per share, which was two months ago, to its current level of $2.34. Over this period, the Zacks Consensus Estimate for 2020 has been raised around 7.4% to $2.92 per share with three estimates treading northward.
Upbeat Q2 Performance
World Fuel Services delivered adjusted earnings per share of 58 cents in second-quarter 2019, marking a 23.4% year-over-year improvement. Moreover, the figure beat the Zacks consensus estimate by 7.4%. This earnings improvement is primarily attributable to a heightened focus on segmenting and satisfying demand that ensures greater value to customers, which was achieved by concentrating on ramping up fuel deliveries in specific geographies where customers are experiencing supply crisis.
World Fuel Services’ adjusted EBITDA for the second quarter rose 17% to $98 million.
Further, the company generated operating cash flow of $125 million and hiked its dividend by 66% through the repurchase of common stocks worth $65 million.
Healthy EPS Projections
The Zacks Consensus Estimate for World Fuel Services’ 2019 earnings is currently pegged at $2.34, suggesting growth of 10.90% from the year-ago reported figure. The same for 2020 is pegged at $2.92, indicating a year-over-year improvement of almost 25% from the prior-year number.
Positive Earnings Surprise History
World Fuel Services outpaced the Zacks Consensus Estimate in all the trailing four quarters, the average being 16.43%.
World Fuel Services Corporation Price and EPS Surprise
World Fuel Services Corporation price-eps-surprise | World Fuel Services Corporation Quote
Strong Balance Sheet
In the second quarter, the company generated cash and cash equivalents worth $218.1 million. It’s debt to capitalization ratio was 27%.
Following its reduction of debt burden, the company managed to lower its net debt to adjusted EBITDA ratio to 1.2 times, down from 1.9 times in the comparable quarter last year.
Zacks Rank & Other Key Picks
World Fuel Services currently has a Zacks Rank #2 (Buy) and a VGM Score of B. Our research shows that stocks with an impressive VGM Score of A or B combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best investment opportunities.
Other top-ranked players in the energy space include Enbridge Inc. (ENB - Free Report) , Dril-Quip, Inc. (DRQ - Free Report) and BP Midstream Partners , each holding the same solid Zacks Rank of 2 as World Fuel Services. You can see the complete list of today’s Zacks #1 Rank stocks here.
Enbridge’s earnings beat the Zacks Consensus Estimate in three of the last four quarters.
Dril-Quip’s earnings beat the Zacks Consensus Estimate in three of the previous four quarters.
BP Midstream’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>