Why Kirby Shares Sank

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Kirby (NYS: KEX) plunged 13% Monday after the tank barge operator cut its quarterly and full-year earnings guidance.

So what: Kirby shares have been walloped recently on worries about soft demand, and today's big second-quarter guidance cut -- management sees EPS of $0.80-$0.85 versus its prior view of $0.97-$1.02 -- confirms those fears. Decade-low natural gas prices continue to hurt orders at the company's hydraulic fracturing unit, United Holdings, giving investors very little hope for a near-term turnaround.

Now what: Looking further ahead, management now expects full-year 2012 EPS of $3.45-$3.70, down from its earlier forecast of $3.85-$4.12. "While numerous negative issues have resulted in the lowering of our 2012 second quarter earnings guidance, for the 2012 year the primary difference between our low end guidance of $3.45 per share and high end guidance of $3.70 per share is the level of United's oil field related business in the second half of the year," Chairman and CEO Joe Pyne said. More important, with the stock hitting a new 52-week low today and trading at a forward P/E of roughly 11, most of that weakness might already be baked into the price.

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The article Why Kirby Shares Sank originally appeared on Fool.com.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

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