Kirby Corporation (NYSE:KEX) Not Lagging Market On Growth Or Pricing

Kirby Corporation -0.62% Pre

Kirby Corporation

KEX

96.54

96.54

-0.62%

0.00% Pre

When close to half the companies in the United States have price-to-earnings ratios (or "P/E's") below 16x, you may consider Kirby Corporation (NYSE:KEX) as a stock to potentially avoid with its 23.5x P/E ratio. However, the P/E might be high for a reason and it requires further investigation to determine if it's justified.

With its earnings growth in positive territory compared to the declining earnings of most other companies, Kirby has been doing quite well of late. It seems that many are expecting the company to continue defying the broader market adversity, which has increased investors’ willingness to pay up for the stock. You'd really hope so, otherwise you're paying a pretty hefty price for no particular reason.

See our latest analysis for Kirby

pe-multiple-vs-industry
NYSE:KEX Price to Earnings Ratio vs Industry December 29th 2023
Want the full picture on analyst estimates for the company? Then our free report on Kirby will help you uncover what's on the horizon.

Does Growth Match The High P/E?

The only time you'd be truly comfortable seeing a P/E as high as Kirby's is when the company's growth is on track to outshine the market.

Taking a look back first, we see that the company grew earnings per share by an impressive 108% last year. Although, its longer-term performance hasn't been as strong with three-year EPS growth being relatively non-existent overall. Therefore, it's fair to say that earnings growth has been inconsistent recently for the company.

Looking ahead now, EPS is anticipated to climb by 42% during the coming year according to the five analysts following the company. With the market only predicted to deliver 10%, the company is positioned for a stronger earnings result.

In light of this, it's understandable that Kirby's P/E sits above the majority of other companies. Apparently shareholders aren't keen to offload something that is potentially eyeing a more prosperous future.

What We Can Learn From Kirby's P/E?

Typically, we'd caution against reading too much into price-to-earnings ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the company.

We've established that Kirby maintains its high P/E on the strength of its forecast growth being higher than the wider market, as expected. Right now shareholders are comfortable with the P/E as they are quite confident future earnings aren't under threat. Unless these conditions change, they will continue to provide strong support to the share price.

The company's balance sheet is another key area for risk analysis. You can assess many of the main risks through our free balance sheet analysis for Kirby with six simple checks.

Of course, you might also be able to find a better stock than Kirby. So you may wish to see this free collection of other companies that have reasonable P/E ratios and have grown earnings strongly.

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