Back in August, I reiterated what had become an all-too-familiar refrain for me in reference to leading barge operator Kirby Corporation (NYSE:KEX) - the company was a top-notch operator with strong share and a solid balance sheet, but the stock was just too expensive for my comfort.
Since then, plunging oil prices and increased concerns about pricing
and barge utilization, not to mention serious pressure in diesel engine
services business, have more than a third of the stock's market cap
away.
I still hesitate to call Kirby a clear-cut bargain. The
shares are admittedly more in tune with historical valuation averages,
but the market is still showing a willingness to pay more for Kirby's
growth than it will pay for other transport companies. I'm not so
bothered by this; I see no reason for "valuation equality" and I think
companies that have established themselves as superior operators ought
to get premium valuations and Kirby is one of those. So while hard-core
value hounds may still balk at this price, and there certainly are
reasons to worry that the shares could drop further before bottoming
out, I think long-term investors who look to "buy the dip" on good
companies ought to take a closer look here.
Read more here:
Skidding Prices Have Brought Rare Sanity To Kirby's Valuation
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