Kirby (KEX) has been through tough times before - the economically-sensitive nature of the petrochemical products it transports basically guarantees that - but this sudden downturn is being exacerbated by the company's decisions in past years to diversify into engines and industrial parts, particularly in the oil/gas space. While the marine business remains comfortably profitable, and with a large share in the industry, the distribution and services business (or DES) seems to keep finding new legs down.
While I did flag the risk that things would get worse before they got better, the 20% or so additional drop in Kirby's share price was more than I expected. Some of that can be attributed to weaker demand in Marine, but I think the weak outlook for the DES business may be having a bigger impact. In any case, these shares do look undervalued on cash flow and EV/EBITDA, and I believe the shares trade below the tangible book value of the Marine assets, making this a name for patient investors to consider.
Follow this link to the full article:
The Value Of Kirby's Marine Business Is Being Submerged By Weak Results From DES
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