BTIG has maintained a Buy rating on Kirby Corporation (NYSE: NYSE:KEX), a company specializing in inland and coastal marine transportation, with a steady price target of $140.00.
The firm observed notable growth in barge activity, which is expected to enhance spot and term pricing for inland tank barges. Specifically, in the third quarter of 2024, there was approximately a 6% quarter-over-quarter and an 11% year-over-year increase in activity through certain river locks that the firm tracks.
The substantial growth in barge activity is attributed to the petrochemical (petchem) volumes, which saw a rise of around 13% from the previous quarter and approximately 19% compared to the same period last year. This increase was supported by a 27% quarter-over-quarter uptick in upriver petchem activities, despite a slight 2% decline along the Gulf Coast.
Conversely, refined product volumes through the tracked river locks saw a modest 3% increase quarter-over-quarter but experienced a 5% decrease year-over-year. The analyst pointed out that this decline is likely due to lower crack spreads in the US Gulf Coast, which began to experience pressure in August.
Crack spreads in the third quarter of 2024 were down by about 50% from the third quarter of 2023, with a further 10% drop below the levels seen in the fourth quarter of 2024. Additionally, refinery utilization decreased by roughly 100 basis points in the third quarter of 2024 compared to the same quarter the previous year.
In other recent news, Kirby Corporation has reported strong Q2 results for 2024, despite facing weather-related and navigational challenges. The company's earnings per share (EPS) saw a significant increase to $1.43, up from $0.95 in the same quarter of the previous year. This growth was fueled by robust demand across its segments, with inland and coastal revenues witnessing substantial growth.
Kirby's power generation revenues also increased by 9% year-over-year, while oil and gas revenues declined by 33% year-over-year but saw a sequential increase of 22%. The company's barge utilization rates remained high in both inland and coastal sectors.
In terms of future expectations, Kirby anticipates high-end year-over-year earnings growth within the original 30% to 40% guidance for 2024. The company also projects to generate between $300 million and $350 million of free cash flow in 2024.
InvestingPro Insights
Kirby Corporation's financial metrics and market performance align well with BTIG's bullish outlook. According to InvestingPro data, Kirby's revenue growth of 6.41% over the last twelve months and 6.07% in Q2 2024 reflects the increased barge activity noted in the report. The company's strong EBITDA growth of 34.24% further supports the positive trend in its operations.
InvestingPro Tips highlight that Kirby is trading at a low P/E ratio relative to near-term earnings growth, with a PEG ratio of 0.4, suggesting potential undervaluation. This aligns with the expected boost in operating margins mentioned in the article. Additionally, the company's liquid assets exceeding short-term obligations indicate financial stability, which is crucial for navigating the dynamic marine transportation market.
Investors seeking more comprehensive analysis can access 6 additional InvestingPro Tips for Kirby Corporation, providing deeper insights into the company's financial health and market position.
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