Tuesday, April 7, 2015

Seeking Alpha: Skidding Prices Have Brought Rare Sanity To Kirby's Valuation

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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