Dj Kirby Corp Price Target Raised To $147.00/Share From $145.00 By Citigroup

Marine transportation service company Kirby missed Wall Street’s revenue expectations in Q4 CY2025, but sales rose 6.2% year on year to $851.8 million. Its non-GAAP profit of $1.68 per share was 3.2% above analysts’ consensus estimates.

Kirby (KEX) Q4 CY2025 Highlights:

• Revenue: $851.8 million vs analyst estimates of $863.8 million (6.2% year-on-year growth, 1.4% miss)
• Adjusted EPS: $1.68 vs analyst estimates of $1.63 (3.2% beat)
• Adjusted EBITDA: $203.1 million vs analyst estimates of $191.8 million (23.8% margin, 5.9% beat)
• Operating Margin: 15.2%, up from 6.3% in the same quarter last year
• Market Capitalization: $6.62 billion

StockStory’s Take

Kirby’s fourth quarter results fell short of Wall Street’s revenue expectations, leading to a significant negative market reaction. Management cited typical seasonal softness and weather-related delays as primary headwinds, particularly in its marine transportation business, while highlighting strong execution in maintaining margins. CEO David Grzebinski pointed to cost discipline and stable customer demand in the coastal segment as mitigating factors, noting, “Our teams worked hard on controlling costs, operating safely, and protecting margins.” Persistent weakness in the conventional oil and gas market also weighed on distribution and services results.

Looking ahead, Kirby’s outlook is shaped by improving barge utilization, firming spot rates in marine transportation, and robust demand in power generation. Management emphasized that limited new vessel construction is keeping supply tight, supporting pricing across both inland and coastal segments. Grzebinski stated, “We expect to deliver steady financial performance in 2026, with earnings projected to strengthen year over year,” highlighting growing backlog in power generation and stable refinery activity. However, the company remains cautious about inflationary pressures and uneven demand across some product lines.

Key Insights from Management’s Remarks

Kirby’s management attributed the quarter’s performance to a mix of seasonal weather impacts, marine market dynamics, and continued strength in power generation within distribution and services.

• Seasonal weather delays: Both inland and coastal marine operations faced increased delay days due to winter storms, which impacted efficiency and contributed to lower utilization early in the quarter. Management noted that while this is typical for the season, it required aggressive cost management to sustain margins.
• Mixed pricing trends: Inland marine experienced early-quarter pricing softness, with spot and term renewals down low single digits. However, as barge utilization tightened toward year-end, spot prices rebounded. CEO David Grzebinski explained that spot rates have already recovered more in January than they declined in Q4, signaling improving market fundamentals.
• Stable coastal demand and supply: The coastal segment benefited from high barge utilization (mid to high 90% range) and limited vessel supply, helping maintain operating margins around 20%. Management attributed revenue growth in this area primarily to pricing, as capacity increases are constrained by limited newbuild activity.
• Power generation drives segment growth: The distribution and services segment saw 47% year-over-year growth in power generation revenues, fueled by demand from data centers and industrial customers. Management highlighted expanding backlog and new facility investments to accommodate higher power applications.
• Cost pressures and margin management: Rising medical costs and inflationary wage pressures weighed on margins across segments. Management was able to offset much of this through lower claims losses and disciplined expense control, but indicated that these headwinds will persist into 2026.

Drivers of Future Performance

Kirby’s guidance for the year is underpinned by tight marine vessel supply, steady refinery demand, and continued expansion of its power generation business, though management remains watchful of inflation and supply chain constraints.

• Tight marine market supports pricing: Limited new vessel construction is expected to keep supply in check, allowing for gradual pricing improvement in both inland and coastal markets. Management anticipates barge utilization to average in the low 90% range for inland and mid-90% for coastal, with spot pricing already trending upward at the start of the year.
• Power generation backlog and demand: Robust orders from data centers and industrial customers are projected to sustain growth in the power generation segment, though management cautioned that supply chain constraints may cause uneven delivery schedules. Expansion into more complex, higher-margin behind-the-meter systems is also expected to benefit future profitability.
• Inflation and cost headwinds: Wage and medical cost inflation, along with planned shipyard activity in the coastal segment, are expected to pressure operating margins, particularly in the first half of the year. Management stressed ongoing cost control and selective capital investments as key to mitigating these risks.

Catalysts in Upcoming Quarters

Looking forward, the StockStory team will be monitoring (1) sustained improvements in inland and coastal barge utilization and spot pricing, (2) the pace and mix of power generation equipment deliveries, particularly expansion into higher-margin behind-the-meter systems, and (3) the impact of inflationary pressures, including wage and medical costs, on operating margins. Execution on supply chain management and progress in growing the service business will also be important indicators.

Kirby currently trades at $122.16, down from $128.13 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free).