Bank of America (BofA) has revised its outlook on World Kinect Corporation (WKC, Financial), reducing the firm's price target from $27 to $26. This downgrade follows the analysis of the company's first-quarter performance, which prompted the continuation of an Underperform rating for the shares.
The latest financial review has also led to a downward adjustment in the expected earnings per share (EPS) for the upcoming years. Specifically, BofA now anticipates a 4% decrease in the 2025 EPS, bringing it to $2.20, and a 7% decrease in the 2026 EPS, lowering it to $2.55.
These adjustments reflect BofA's reassessment of World Kinect's future earnings capacity, impacting investor expectations and market sentiment surrounding the stock.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 4 analysts, the average target price for World Kinect Corp (WKC, Financial) is $30.50 with a high estimate of $35.00 and a low estimate of $27.00. The average target implies an upside of 24.03% from the current price of $24.59. More detailed estimate data can be found on the World Kinect Corp (WKC) Forecast page.
Based on the consensus recommendation from 5 brokerage firms, World Kinect Corp's (WKC, Financial) average brokerage recommendation is currently 3.2, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for World Kinect Corp (WKC, Financial) in one year is $24.68, suggesting a upside of 0.37% from the current price of $24.59. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the World Kinect Corp (WKC) Summary page.
WKC Key Business Developments
Release Date: February 20, 2025
- Share Repurchase: $100 million of shares repurchased during the year, nearly double the amount repurchased in 2023.
- 4th Quarter Total Volume: 4.5 billion gallons, down 1% year over year.
- Full Year Total Volume: 17.7 billion gallons, down approximately 2% year over year.
- 4th Quarter Adjusted Gross Profit: $259 million, declined 8% year over year.
- Full Year Adjusted Gross Profit: $1.03 billion, down 7% from 2023.
- Aviation Volume (4th Quarter): 1.8 billion gallons, up 4% year over year.
- Aviation Gross Profit (4th Quarter): $120 million, decreased 8% year over year.
- Land Volume (4th Quarter): Decreased 5% year over year.
- Land Adjusted Gross Profit (4th Quarter): $104 million, effectively flat year over year.
- Marine Volume (4th Quarter): Down 4% year over year.
- Marine Gross Profit (4th Quarter): Decreased approximately 22% year over year.
- Adjusted Operating Expenses (4th Quarter): $197 million, down 5% year over year.
- Full Year Adjusted Operating Expenses: $773 million, down 6% from 2023.
- Interest Expense (4th Quarter): $22 million, down approximately 33% year over year.
- Adjusted Effective Tax Rate (4th Quarter): 12%.
- Operating Cash Flow (4th Quarter): $120 million.
- Free Cash Flow (4th Quarter): $102 million.
- Full Year Operating Cash Flow: $260 million.
- Full Year Free Cash Flow: $192 million.
- Capital Returned to Shareholders (Full Year): $139 million through buybacks and dividends, a 47% increase year over year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- World Kinect Corp (WKC, Financial) reported strong cash flow generation in the fourth quarter and full year, enabling the repurchase of $100 million in shares, nearly double the amount repurchased in 2023.
- The aviation business delivered impressive results in the fourth quarter, capitalizing on favorable market conditions in both commercial resale and business and general aviation activities.
- The land segment achieved its strongest quarterly operating margin for the year in the fourth quarter, with expectations for continued improvement in 2025.
- The divestiture of the underperforming Brazilian business aligns with WKC's strategy to streamline operations and improve financial returns.
- WKC's strong cash flow and solid balance sheet provide ample financial resources to pursue strategic acquisitions and growth opportunities.
Negative Points
- Consolidated adjusted gross profit declined 8% year over year in the fourth quarter, primarily due to lower gross profit in aviation and marine segments.
- The sale of the Brazilian operations resulted in a one-time non-cash pre-tax charge of approximately $111 million.
- Marine gross profit decreased approximately 22% year over year in the fourth quarter, driven by lower bunker fuel prices and reduced market volatility.
- The land segment's full-year adjusted gross profit was down 14% year over year, impacted by unfavorable market conditions in Brazil and the UK.
- The adjusted effective tax rate for 2025 is expected to increase to a range of 22% to 25%, up from just under 15% in 2024.
