Analyst Ken Hoexter from Bank of America Securities reiterated a Sell rating on World Kinect (WKC – Research Report) and decreased the price target to $23.00 from $26.00.
Ken Hoexter has given his Sell rating due to a combination of factors including World Kinect’s underperformance in key areas. The company reported an adjusted EPS of $0.47, which not only missed the Bank of America Securities’ target of $0.58 but also fell short of the broader market consensus. Additionally, the total volume of fuel resold by World Kinect decreased by 1% year-over-year, leading to a shortfall in gross revenues, which came in 12% lower than the previous year and underperformed by $490 million against expectations. The company’s gross profit was weaker than anticipated in both their Land and Aviation segments, which contributed significantly to the EPS miss.
Moreover, Hoexter highlighted that the Aviation segment’s volume decline was more severe than projected, and the Land segment’s growth was insufficient relative to targets, primarily impacted by weather-related factors. Despite some cost control measures implemented by World Kinect, these were not enough to counterbalance the gross profit miss. The adjusted tax rate did provide some benefit, but it was not sufficient to alter the overall assessment. Consequently, Hoexter reiterated an Underperform rating and lowered the price objective to $23, based on a valuation multiple that is below the historical range, reflecting a cautious outlook amidst macroeconomic concerns.
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World Kinect (WKC) Company Description:
World Fuel Services Corp. is a fuel logistic company, which engages in the provision of energy procurement advisory services, supply fulfillment, and transaction and payment management solutions. It operates through the following segments: Aviation, Marine, and Land. The Aviation segment supply fuel and service solutions to commercial airlines, second and third-tier airlines, cargo carriers, regional and low-cost carriers, airports, fixed based operators, corporate fleets, fractional operators, and private aircraft. The Land segment offers fuel, heating oil, propane, natural gas, lubricants, and related products and services to petroleum distributors operating in the land transportation market, retail petroleum operators, and industrial, commercial, residential, and government customers. The Marine segment markets it products and services to marine customers, including international container and tanker fleets, commercial cruise lines, yachts and time-charter operators, U.S. and foreign governments, and other fuel suppliers. Its solutions include oil and energy procurement, distribution and storage, operations support, financial, consulting services, and technology. The company was founded in July 1984 and is headquartered in Miami, FL.
