Seeking Alpha
Editor's notes: AE's earnings, overly reliant on market effects and special items, are poised to fall off. Margin compression due to narrowing spreads could make for sizable downside.

At first glance, Adams Resources & Energy (AE) seems like a screaming buy, and a value investor's dream. Trailing twelve-month earnings are $7.16 per share; at Thursday's close of $60.61 per share, the company's trailing price-to-earnings ratio sits below 9. Over $8 per share in cash provides a downside cushion; a quarterly dividend yielding 1.4% returns capital to shareholders. And earnings growth has been phenomenal: earnings per share rose more than sixfold between 2009 and 2012, with another 20 percent increase year-over-year in the first half of 2013.

Yet behind the seemingly glittering fundamentals lie significant concerns about AE's ability to maintain current share price levels. Recent growth has not been as explosive as it would first...

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