Wednesday, October 26, 2022

Kirby Reaping The Benefits Of A Tighter Market

Healthy demand for petrochemicals and a more rational supply situation has benefited Kirby (NYSE:KEX), with the combination of strong refinery capacity utilization and limited new supply driving good utilization and much higher day rates for the company’s barge fleet. At the same time, increased demand for engine and transmission maintenance and overhaul from trucking, power gen, and oil/gas has helped the Distribution & Services (or DES) business perform better.

These shares are up about 3% since my last update; not a great performance, but not bad relative to the average industrial or transportation company (Kirby doesn’t have any good direct comps), and Kirby has actually outperformed oil since that last update (Kirby shares and oil often trade together, given Kirby’s reliance on oil and oil-based refined products). While I do see some clouds on the horizon with the economy, the valuation is still reasonable for a company that has in the past enjoyed a robust premium.

 

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Kirby Reaping The Benefits Of A Tighter Market

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