Should Kirby Be Disappointed With Their 39% Profit?

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Investors can buy low cost index fund if they want to receive the average market return. But in any diversified portfolio of stocks, you’ll see some that fall short of the average. For example, the Kirby Corporation (NYSE:KEX) share price return of 39% over three years lags the market return in the same period. At least the stock price is up over the last year, albeit only by 3.3%.

See our latest analysis for Kirby

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it’s a weighing machine. By comparing earnings per share (EPS) and and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

During the three years of share price growth, Kirby actually saw its earnings per share (EPS) drop 32% per year. Thus, it seems unlikely that the market is focussed on EPS growth at the moment. Given this situation, it makes sense to look at other metrics too.

It could be that the revenue growth of 16% per year is viewed as evidence that Kirby is growing. In that case, the company may be sacrificing current earnings per share to drive growth, and maybe shareholder’s faith in better days ahead will be rewarded.

You can see how revenue and earnings have changed over time in the image below, (click on the chart to see cashflow).

NYSE:KEX Income Statement, February 22nd 2019
NYSE:KEX Income Statement, February 22nd 2019

You can see how its financial situation has strengthened (or weakened) over time in this free interactive graphic.

A Different Perspective

Kirby provided a TSR of 3.3% over the year. That’s fairly close to the broader market return. To take a positive view, the gain is pleasing, and it sure beats annualized TSR loss of 5.6%, which was endured over half a decade. We’re pretty skeptical of turnaround stories, but it’s good to see the recent share price recovery. If you would like to research Kirby in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.

If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of companies that have proven they can grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.