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Cost Cuts & Better Freight Conditions Aid Knight-Swift (KNX)

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We recently issued an updated report on Knight-Swift Transportation Holdings Inc. (KNX - Free Report) .

Knight-Swift’s efficient cost-control measures and enhanced safety procedures have significantly aided its performance. Total operating expenses declined 9.1% year over year in the first nine months of 2020. Moreover, adjusted operating ratio improved to 86.6% in the first nine months of 2020 from 88.6% in the same period of 2019. The improvement can be attributed to lower costs. Lower the value of the metric, the better.

We are also impressed by the company’s outlook for full-year 2020 earnings per share (EPS). The company expects adjusted EPS in the band of $2.68-$2.72 (previously $2.15-$2.30) for 2020. Improving freight conditions might have led to the bullish outlook. The company expects the strong freight conditions to continue. Moreover, the company expects adjusted EPS in the band of $3.20-$3.40 for 2021. The Zacks consensus estimate for 2020 and 2021 EPS are estimated to be at $2.71 and $3.32 respectively.

Despite recent improvements, freight conditions are still weak on a year-over-year basis. This has hurt Knight-Swift's performance in the first nine months of 2020. Consequently, trucking revenues (excluding fuel surcharge and inter-segment transactions) declined 6.9% year over year during the first nine months of the year.

Zacks Rank & Other Stocks to Consider

Knight-Swift currently sport a Zacks Rank #1 (Strong Buy).

Investors interested in the broader Zacks Transportation sector may also consider stocks like Landstar System, Inc. (LSTR - Free Report) , FedEx Corporation (FDX - Free Report) and Herc Holdings Inc. (HRI - Free Report) . Landstar carry a Zacks Rank #2 (Buy) while FedEx and Herc Holdings sport a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term expected earnings per share (three to five years) growth rate for Landstar, FedEx and Herc Holdings is pegged at 12%, 12% and 6.5%, respectively.

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