On July 30, World Fuel Services (NYSE:INT) reported another set of rather unspectacular results:
Excluding expenses related to an executive non-renewal charge, net income was $51.2 million or $0.72 diluted earnings per share. This compares to $51.0 million or $0.71 diluted earnings per share in the second quarter of 2013. Non-GAAP net income and diluted earnings per share for the second quarter, excluding share-based compensation, amortization of acquired intangible assets and an executive non-renewal charge were $57.9 million and $0.81, respectively, compared to $57.5 million and $0.80 in 2013.
After the stock had done well following my first article on the company, rising 14% in the past three months, it is now back where it had started. While I understand that investors are probably getting impatient with the company, as EPS has continued to stay roughly flat for many quarters, the usual combination of rising revenues and shrinking margins should not surprise my readers. As I had stated in my April 2014 analysis, World Fuel Services is unlikely to grow earnings meaningfully without oil price volatility picking up. Furthermore, I am pleased to note that the company finally decided to stop dilution by repurchasing a meaningful quantity of its own shares.
Hence, my basic investment thesis remains intact and I continue to consider the stock to be at the very least slightly undervalued at its current price level. Potential investors, however, should feel comfortable with a multi-year time frame.
Disclosure: The author has no positions in any stocks mentioned, but may initiate a long position in INT over the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.