We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Why Is Knight-Swift (KNX) Down 13% Since Last Earnings Report?
Read MoreHide Full Article
A month has gone by since the last earnings report for Knight-Swift Transportation Holdings (KNX - Free Report) . Shares have lost about 13% 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.
Earnings Beat at Knight-Swift in Q4
Knight-Swift's fourth-quarter 2019 adjusted earnings (excluding 16 cents from non-recurring items) of 55 cents beat the Zacks Consensus Estimate of 51 cents. However, the bottom line plunged 40.9% year over year due to persistent weakness in the freight environment and overcapacity of trucks in the market. Additionally, total revenues of $1,196.8 million lagged the consensus mark of $1,225.8 million and also decreased 14.2% year over year with sluggish revenues at each of its three segments.
Effective tax rate came in at 27.2% compared with 25% in the fourth quarter of 2018. For 2020, the same (before discrete items) is expected to be 25.5-27%.
Segmental Results
Revenues in the Trucking segment totaled (excluding fuel surcharge and intersegment transactions) $861.43 million, down 11.2% year over year. Results were hampered by 10.6% decrease in average revenue per tractor (miles per tractor declined 5.4% in the quarter). Adjusted segmental operating income also dropped 35.8% to $118.95 million. Adjusted operating ratio (operating expenses as a percentage of revenues) deteriorated 530 basis points (bps) to 86.2% in the quarter under discussion. Notably, lower value of this key metric bodes well for the company.
Revenues in the Logistics segment (before intersegment transactions) amounted to $92.76 million, down 30.2% year over year due to 30.8% decline in brokerage revenues. While adjusted operating ratio deteriorated 360 bps to 93%, segmental operating income slumped 53.8% to $6.49 million.
Revenues in the Intermodal segment (excluding intersegment transactions) totaled $111.82 million, dropping 18.7% year over year as a result of 9.4% fall in load counts. Segmental adjusted operating ratio came in at 99.5%, deteriorating 910 bps while operating income contracted 95.4% to $0.6 million.
Operating Results
Total operating expenses decreased 7.6% year over year to $1.1 billion. Adjusted operating ratio (defined as operating expenses as a percentage of revenues) deteriorated to 87.8% from 82.5% in the year-ago quarter. Knight-Swift’s adjusted operating income declined 40.5% year over year to $131.97 million due to excess truck capacity amidst the soft freight environment and intense competition in the intermodal market.
Liquidity
The company exited the fourth quarter with cash and cash equivalents of $159.72 million compared with $82.49 million at the end of 2018. The company did not have any long-term debt (less current portion) as of Dec 31, 2019. During 2019, it repurchased shares worth $86.9 million and retuned $41.4 million to shareholders through dividends.
Outlook
For 2020, adjusted earnings per share are anticipated to be $2-$2.15. The company expects the freight environment to improve in the second half of 2020 owing to capacity rationalization and other factors might have also boosted the stock. Even though the freight scene remains competitive, Knight-Swift believes that “evidence of capacity rationalization is mounting”.
For the first quarter of 2020, adjusted earnings per share are estimated between 35 cents and 38 cents compared with 42-46 cents expected earlier.
For 2020, capital expenditures are predicted to be $550-$575 million with investments primarily in replacing the existing tractors and trailers as well as in terminal network and driver amenities.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -7.44% due to these changes.
VGM Scores
At this time, Knight-Swift has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Knight-Swift has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Why Is Knight-Swift (KNX) Down 13% Since Last Earnings Report?
A month has gone by since the last earnings report for Knight-Swift Transportation Holdings (KNX - Free Report) . Shares have lost about 13% 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.
Earnings Beat at Knight-Swift in Q4
Knight-Swift's fourth-quarter 2019 adjusted earnings (excluding 16 cents from non-recurring items) of 55 cents beat the Zacks Consensus Estimate of 51 cents. However, the bottom line plunged 40.9% year over year due to persistent weakness in the freight environment and overcapacity of trucks in the market. Additionally, total revenues of $1,196.8 million lagged the consensus mark of $1,225.8 million and also decreased 14.2% year over year with sluggish revenues at each of its three segments.
Effective tax rate came in at 27.2% compared with 25% in the fourth quarter of 2018. For 2020, the same (before discrete items) is expected to be 25.5-27%.
Segmental Results
Revenues in the Trucking segment totaled (excluding fuel surcharge and intersegment transactions) $861.43 million, down 11.2% year over year. Results were hampered by 10.6% decrease in average revenue per tractor (miles per tractor declined 5.4% in the quarter). Adjusted segmental operating income also dropped 35.8% to $118.95 million. Adjusted operating ratio (operating expenses as a percentage of revenues) deteriorated 530 basis points (bps) to 86.2% in the quarter under discussion. Notably, lower value of this key metric bodes well for the company.
Revenues in the Logistics segment (before intersegment transactions) amounted to $92.76 million, down 30.2% year over year due to 30.8% decline in brokerage revenues. While adjusted operating ratio deteriorated 360 bps to 93%, segmental operating income slumped 53.8% to $6.49 million.
Revenues in the Intermodal segment (excluding intersegment transactions) totaled $111.82 million, dropping 18.7% year over year as a result of 9.4% fall in load counts. Segmental adjusted operating ratio came in at 99.5%, deteriorating 910 bps while operating income contracted 95.4% to $0.6 million.
Operating Results
Total operating expenses decreased 7.6% year over year to $1.1 billion. Adjusted operating ratio (defined as operating expenses as a percentage of revenues) deteriorated to 87.8% from 82.5% in the year-ago quarter. Knight-Swift’s adjusted operating income declined 40.5% year over year to $131.97 million due to excess truck capacity amidst the soft freight environment and intense competition in the intermodal market.
Liquidity
The company exited the fourth quarter with cash and cash equivalents of $159.72 million compared with $82.49 million at the end of 2018. The company did not have any long-term debt (less current portion) as of Dec 31, 2019. During 2019, it repurchased shares worth $86.9 million and retuned $41.4 million to shareholders through dividends.
Outlook
For 2020, adjusted earnings per share are anticipated to be $2-$2.15. The company expects the freight environment to improve in the second half of 2020 owing to capacity rationalization and other factors might have also boosted the stock. Even though the freight scene remains competitive, Knight-Swift believes that “evidence of capacity rationalization is mounting”.
For the first quarter of 2020, adjusted earnings per share are estimated between 35 cents and 38 cents compared with 42-46 cents expected earlier.
For 2020, capital expenditures are predicted to be $550-$575 million with investments primarily in replacing the existing tractors and trailers as well as in terminal network and driver amenities.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -7.44% due to these changes.
VGM Scores
At this time, Knight-Swift has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Knight-Swift has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.