Please ensure Javascript is enabled for purposes of website accessibility

World Fuel Services Corp Stock Sinks After Earnings Miss

By Matthew DiLallo – Feb 15, 2017 at 11:36AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The fuel logistics company missed expectations by a wide mark and issued rather lackluster guidance.

What happened

World Fuel Services (INT -2.33%) stock sank on Wednesday morning, falling more than 14% by 10:45 a.m. EST, after reporting lackluster fourth-quarter results.

So what

The fuel logistics company reported revenue of $7.9 billion, which was up 16% year over year and beat analyst expectations by $320 million. Earnings, however, were a different story. While the company did report adjusted earnings of $25.2 million, or $0.36 per share, that missed the consensus estimate by $0.24 per share and was well below the $60.2 million, or $0.86 per share, it earned in the year-ago quarter. World Fuel Services blamed a challenging year across many of its markets for the poor results.

Tanker ships at sea.

Image source: Getty Images.

While the company's aviation segment delivered solid quarterly results, with income from operations rising 10.9% year over year to $36.7 million, land and marine were different stories. Income from operations in the land segment plunged 81.2% to just $6.8 million while the marine segment sank into the red. The marine refueling sector has been under pressure all year due to a rough shipping market. Marine fuel logistics company Aegean Marine Petroleum, for example, noted last quarter that it continued to experience "slowness in the container segment and volatile commodity markets." Those factors drove down Aegean Marine Petroleum's financial results through the third quarter.

While industry conditions were challenging last year, World Fuel Services does see better days ahead. In the press release, CEO Michael Kasbar noted, "We are optimistic about our prospects for 2017 and are focused on executing on our long-term strategy." Furthermore, the company plans to drive additional costs out of its business and has already identified $20 million of annualized savings that it expects to capture this year, which should fuel stronger results. For 2017, the company anticipates that adjusted earnings will be in the range of $2.55 to $2.90 per share. However, at the midpoint earnings would only be about 1% higher than last year and still well off from the $3.05 per share it earned in 2015.

Now what

World Fuel Services is battling through several headwinds as it works toward expanding its reach and becoming a global leader. While the company does expect that its results will improve this year, it still has a long way to go to reclaim its former peak. As compelling as the company believes its strategy is, there are simply better opportunities out there for investors these days.

Matt DiLallo has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

World Fuel Services Corporation Stock Quote
World Fuel Services Corporation
INT
$23.44 (-2.33%) $0.56

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
326%
 
S&P 500 Returns
102%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/02/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.