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Here's Why You Should Avoid Knight-Swift (KNX) Stock Now
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Knight-Swift Transportation Holdings Inc.(KNX - Free Report) is mired in multiple headwinds, which, we believe, have made it an unimpressive investment option.
Softness pertaining to freight demand hurt Knight-Swift’s second-quarter 2023 results. As a result, in the June quarter, Knight-Swift reported lower-than-expected earnings per share (EPS) and revenues. Management also lowered the EPS guidance in the range of $2.10-$2.30 (earlier view: $3.35-$3.55) for 2023. The updated adjusted EPS guidance includes a U.S. Xpress loss of 25-30 cents.
High costs related to driver wages, equipment, maintenance, fuel and other expenses continue to weigh on the bottom line. KNX now expects capital expenditures for 2023 in the $700-$750 million band (prior view: $640-$690 million), which now includes U.S. Xpress. Raised capital expenditure guidance looks disappointing as it might weigh on the company’s bottom line.
Partly due to these headwinds, shares of Knight-Swift have declined 5% so far this year against the 28% rise of the industry it belongs to.
Image Source: Zacks Investment Research
Despite such tailwinds, KNX’s consistent efforts to reward its shareholders via dividends and share buybacks are encouraging. In February 2023, the company’s board approved a 16.67% hike in quarterly cash dividend to 14 cents per share (annually 56 cents). Its free cash flow generation supports shareholder-friendly activities. Free cash flow during the first half of 2023 was $303.08 million.
Zacks Rank and Stocks to Consider
Currently, Knight-Swift carries a Zacks Rank #5 (Strong Sell).
GATX has an expected earnings growth rate of 14.33% for the current year. GATX delivered a trailing four-quarter earnings surprise of 17.30%, on average.
The Zacks Consensus Estimate for GATX’s current-year earnings has improved 2.1% over the past 90 days. Shares of GATX have gained 6% year to date.
Wabtec has an expected earnings growth rate of 16.87% for the current year. WAB delivered a trailing four-quarter earnings surprise of 3.42%, on average.
The Zacks Consensus Estimate for WAB’s current-year earnings has improved 4.9% over the past 90 days. Shares of WAB have gained 5.9% year to date.
SkyWest's fleet-modernization efforts are commendable.A fall in operating expenses is a tailwind for SkyWest. In second-quarter 2023, the metric dipped 2.4% to $693.8 million due to a decline in operating costs. Low operating expenses boost bottom-line results. Shares of SKYW have surged 163.6% year to date.
SKYW delivered a trailing four-quarter earnings surprise of 31.51%, on average.
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Here's Why You Should Avoid Knight-Swift (KNX) Stock Now
Knight-Swift Transportation Holdings Inc.(KNX - Free Report) is mired in multiple headwinds, which, we believe, have made it an unimpressive investment option.
Softness pertaining to freight demand hurt Knight-Swift’s second-quarter 2023 results. As a result, in the June quarter, Knight-Swift reported lower-than-expected earnings per share (EPS) and revenues. Management also lowered the EPS guidance in the range of $2.10-$2.30 (earlier view: $3.35-$3.55) for 2023. The updated adjusted EPS guidance includes a U.S. Xpress loss of 25-30 cents.
High costs related to driver wages, equipment, maintenance, fuel and other expenses continue to weigh on the bottom line. KNX now expects capital expenditures for 2023 in the $700-$750 million band (prior view: $640-$690 million), which now includes U.S. Xpress. Raised capital expenditure guidance looks disappointing as it might weigh on the company’s bottom line.
Partly due to these headwinds, shares of Knight-Swift have declined 5% so far this year against the 28% rise of the industry it belongs to.
Image Source: Zacks Investment Research
Despite such tailwinds, KNX’s consistent efforts to reward its shareholders via dividends and share buybacks are encouraging. In February 2023, the company’s board approved a 16.67% hike in quarterly cash dividend to 14 cents per share (annually 56 cents). Its free cash flow generation supports shareholder-friendly activities. Free cash flow during the first half of 2023 was $303.08 million.
Zacks Rank and Stocks to Consider
Currently, Knight-Swift carries a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks from the Zacks Transportation sector are GATX Corporation (GATX - Free Report) ), Westinghouse Air Brake Technologies Corporation, operating as Wabtec Corporation (WAB - Free Report) and SkyWest, Inc. (SKYW - Free Report) . Each of these companies presently carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
GATX has an expected earnings growth rate of 14.33% for the current year. GATX delivered a trailing four-quarter earnings surprise of 17.30%, on average.
The Zacks Consensus Estimate for GATX’s current-year earnings has improved 2.1% over the past 90 days. Shares of GATX have gained 6% year to date.
Wabtec has an expected earnings growth rate of 16.87% for the current year. WAB delivered a trailing four-quarter earnings surprise of 3.42%, on average.
The Zacks Consensus Estimate for WAB’s current-year earnings has improved 4.9% over the past 90 days. Shares of WAB have gained 5.9% year to date.
SkyWest's fleet-modernization efforts are commendable.A fall in operating expenses is a tailwind for SkyWest. In second-quarter 2023, the metric dipped 2.4% to $693.8 million due to a decline in operating costs. Low operating expenses boost bottom-line results. Shares of SKYW have surged 163.6% year to date.
SKYW delivered a trailing four-quarter earnings surprise of 31.51%, on average.