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As you might know, Kirby Corporation (NYSE:KEX) recently reported its third-quarter numbers. Revenues of US$497m fell slightly short of expectations, but earnings were a definite bright spot, with statutory per-share profits of US$0.46 an impressive 26% ahead of estimates. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, Kirby's six analysts currently expect revenues in 2021 to be US$2.35b, approximately in line with the last 12 months. Kirby is also expected to turn profitable, with statutory earnings of US$1.88 per share. Before this earnings report, the analysts had been forecasting revenues of US$2.46b and earnings per share (EPS) of US$2.36 in 2021. The analysts seem less optimistic after the recent results, reducing their sales forecasts and making a large cut to earnings per share numbers.
The consensus price target fell 6.0% to US$48.50, with the weaker earnings outlook clearly leading valuation estimates. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Kirby analyst has a price target of US$60.00 per share, while the most pessimistic values it at US$42.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that Kirby's revenue growth is expected to slow, with forecast 0.3% increase next year well below the historical 8.4%p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 3.9% next year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Kirby.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Kirby's future valuation.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Kirby going out to 2024, and you can see them free on our platform here..
Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Kirby (1 is potentially serious) you should be aware of.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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