A month has gone by since the last earnings report for Kirby (KEX). Shares have added about 19.6% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Kirby due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Kirby Earnings Surpass Estimates in Q4

Kirby’s fourth-quarter 2020 earnings of 37 cents per share surpassed the Zacks Consensus Estimate of 24 cents. However, the bottom line plunged 36.2% year over year.

Total revenues of $489.8 million lagged the Zacks Consensus Estimate of $495.1 million and declined 25.3% year over year. The top line was hurt by a decline in revenues at the marine transportation, and distribution and services segments, stemming from the coronavirus-induced weak economic conditions.

Segmental Performance

The company, through its subsidiaries, operates via the segments marine transportation, and distribution and services.

In the fourth quarter, revenues in the marine transportation unit fell 25.5% year over year to $299.4 million. Segmental operating income also declined 46.4%   year over year to $29.2 million. However, operating margin deteriorated to 9.7% from 13.6% in the year-ago quarter.

Inland market revenues dropped 28% year over year due to reduced barge utilization and low fuel rebills. The operating margin for the inland business was in the low-to-mid teens.

Revenues at the coastal market fell 18% year over year due to reduced barge utilization, lower fuel rebills, retirements of three large capacity vessels, and delays associated with hurricanes in the Gulf of Mexico in October. The coastal market recorded negative operating margin in the low-to-mid single digits.

At the distribution and services segment, revenues slumped 25% to $190.3 million due to below-par performance in the oil and gas market. Moreover, the segment reported (1.5%) operating margin in the reported quarter compared with (1.1%) in the year-ago period. On a positive note, activity levels have started to gradually recover in the segment since the fourth quarter.

The oil and gas market was weak during the third quarter due to reduction in oilfield activity and low oil prices.  The oil and gas market had a negative operating margin in the mid-teens.

In the commercial and industrial market, revenues increased year over year due to benefits from the acquisition of Convoy Servicing Company in January 2020. The commercial and industrial operating margin was in the low-single digits.

Balance Sheet Highlights

As of Dec 31, 2020, the company had $80.3 million of cash and cash equivalents, compared with $24.7 million at the end of 2019. Long-term debt (including current portion) for this Zacks Rank #4 (Sell) stock increased to $1.5 billion at the end of the fourth quarter from $1.4 billion at the end of Dec 2019. Debt-to-capitalization ratio at the end of fourth-quarter 2020 was 32.2% compared with 28.9% at the end of 2019.

Outlook

Kirby expects to incur capital expenditures of $125 million-$145 million in 2021. Additionally, net cash provided by operating activities is expected to be $375 million-$455 million for the company in 2021. Free cash flow is estimated to be $230 million-$330 million in the year.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -43.75% due to these changes.

VGM Scores

Currently, Kirby has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise Kirby has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.

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