Kirby Corporation (KEX) has a strong history of positive earnings surprises and carries an attractive valuation. The stock is now a Zacks #1 Rank (Strong Buy).
Kirby Corporation, through its subsidiaries, provides marine transportation and diesel engine services in the United States. The company operates in two segments, Marine Transportation and Diesel Engine Services. The Marine Transportation segment engages in the inland transportation of petrochemicals, black oil products, refined petroleum products, and agricultural chemicals by tank barges; and offshore transportation of dry-bulk cargoes by barges.
Earnings Surprises Streak
KEX has posted six straight positive earnings surprises, a fact that gives us more faith in management. By effectively managing the expectations of Wall Street, management has produced a solid history of earnings beats. The biggest beat was recorded in the December 2010 quarter, a the company saw a 9% surprise when earnings were $0.05 ahead of the Zacks Consensus Estimate.
Over the last four quarters, the company has beat the Zacks Consensus Estimate by $0.02 three times and $0.03 one time. One of the $0.02 beats resulted in the biggest stock move of any of the last six reports. An 8% increase in share prices followed the September 2011 earnings report which also included a nearly 10% upside surprise on revenue.
KEX Reported Earnings
On February 2, 2012 the company reported revenue of $550 million up from $286 million in the year ago period. In addition, earnings per share came in at $1.02 up from $0.59 posted a year ago.
KEX trades at a premium to the industry average on all major metrics that aggressive growth investors routinely look at. Still a price to forward earnings multiple of 17x is not overly rich considering the industry average is at nearly 11x. Price to book carries a slim premium compared to the industry average, but the price to sales multiple is a little rich at 2.1x versus a 0.8x multiple for the industry average.
The price and consensus chart for Kirby Corporation shows that the analysts believed that the stock was overvalued for much of 2010. In 2011, their estimates bumped higher and have only recently caught up with the stock. Now that estimates are just starting to move higher than the stock price, we can expect the stock to soon catch up to those expectations. KEX is a Zacks #1 Rank (Strong Buy).