A month has gone by since the last earnings report for Knight-Swift Transportation Holdings (KNX). Shares have lost about 7.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Knight-Swift due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Knight-Swift's fourth-quarter 2024 adjusted earnings of 36 cents per share beat the Zacks Consensus Estimate of 33 cents and improved more than 100% year over year. KNX’s bottom line benefitted from the closure of the third-party insurance business in the first quarter of 2024 (as this business generated a $71.7 million operating loss in the fourth quarter of 2023) and 5.8 percentage point decrease in the effective tax rate. The reported figure met the higher end of the guided range of 32-36 cents.
Total revenues of $1.86 million missed the Zacks Consensus Estimate of $1.89 million and declined 3.5% year over year. Revenues, excluding truckload and LTL fuel surcharge, fell 0.9% year over year to $1.67 billion.
Total operating expenses (on a reported basis) decreased 6.6% year over year to $1.78 billion. Knight-Swift’s adjusted operating ratio of 93.7%, improved more than 300 basis points from the prior-year quarter.
Revenues (excluding fuel surcharge and inter-segment transactions) from Truckload totaled $1.10 billion, down 4.4% year over year owing to a 3.7% decrease in loaded miles, mainly in the dedicated services.
Adjusted segmental operating income grew 22.9% to $85.96 million. Adjusted operating ratio (operating expenses as a percentage of revenues) fell 170 basis points (bps) to 92.2%.
The Less-Than-Truckload segment generated revenues (excluding fuel surcharges) worth $278.89 million in the fourth quarter, up 20.2% year over year as shipments per day increased 13.3% year-over-year, which includes the acquisition of DHE on July 30, 2024.
Adjusted segmental operating income down 54.9% to $15.21 million. Adjusted operating ratio rose 900 bps to 94.5%.
Revenues from Logistics (excluding inter-segment transactions) amounted to $167.99 million (up 2.1% year over year). Adjusted operating income decreased 6.4% to $10.56 million. The adjusted operating ratio rose 60 bps to 93.7%.
Intermodal revenues (excluding inter-segment transactions) totaled $99.04 million, up 4.9% year over year owing to a 10.2% increase in load count, partially offset by a 4.8% decline in revenue per load year-over-year. The operating ratio (on a reported basis) fell 320 bps to 101.5%.
Revenue within KNX’s All Other Segments for the fourth quarter declined 36.4% year-over-year to $44.7 million, owing to the winding down of KNX’s third-party carrier insurance program at the end of first quarter 2024.
Knight-Swift exited the fourth quarter with cash and cash equivalents of $218.26 million compared with $166.34 million at the prior-quarter end. Long-term debt (excluding current maturities) was $1.44 billion compared with $1.50 billion at the end of prior quarter.
Adjusted EPS for the first quarter of 2025 is still expected in the range of 29-33 cents. For second-quarter 2025, adjusted EPS is expected in the range of 46-50 cents.
Net interest expense is expected to be down modestly sequentially in the first quarter of 2025 and stable sequentially into the second quarter of 2025. KNX expects net cash capital expenditures for 2025 in the $575 million - $625 million band. The tax rate (on an adjusted basis) is expected to be around 24.5-25.5% for 2025.
It turns out, estimates revision have trended upward during the past month.
Currently, Knight-Swift has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions has been net zero. Notably, Knight-Swift has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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