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Knight-Swift (KNX) Benefits From Dividend Amid Cost Woes

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Knight-Swift Transportation Holdings Inc. (KNX - Free Report) benefits from its shareholder-friendly initiatives. The company recently announced a hike in its dividend payout. KNX’s board of directors approved a dividend hike of 14.2%, thereby raising its quarterly cash dividend from 14 cents per share to 16 cents. The raised dividend is anticipated to be paid out on Mar 25, 2024, to all its shareholders of record as of Mar 8.

The move reflects KNX’s intention to utilize free cash to enhance its shareholders’ returns. Notably, KNX has raised its quarterly dividend five times in the past five years for a 167% overall increase.

Such shareholder-friendly moves not only instill investor confidence but also impact the company’s bottom line.

On the flip side, high costs related to driver wages, equipment, maintenance, fuel and other expenses are restricting Knight-Swift’s bottom-line growth. During 2023, salaries, wages and benefits expenses rose 14.1% year over year, while operations and maintenance expenses climbed 11.9%. With oil prices rising, escalating fuel costs are flaring up the operating costs. Total operating expenses increased 7.4% year over year to $6.80 billion. KNX expects net cash capital expenditures for 2024 in the $625-$675 million band.

Knight-Swift exited the fourth quarter of 2023 with cash and cash equivalents of $168.55 million, which is lower than its long-term debt (excluding current maturities) of $1.22 billion. This implies that the company does not have enough cash to meet its debt obligations.

Zacks Rank and Stocks to Consider

KNX currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the Zacks Transportation sector are GATX Corporation (GATX - Free Report) and SkyWest, Inc. (SKYW - Free Report) . Each stock 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 encouraging track record with respect to earnings surprise, having surpassed the Zacks Consensus Estimate in three of the last four quarters (missing the mark in the remaining one). The average beat is 16.47%.

The Zacks Consensus Estimate for 2024 earnings has been revised 8.9% upward over the past 90 days. GATX has an expected earnings growth rate of 6.51% for 2024. Shares of GATX have gained 26% in the past year.

SkyWest's fleet-modernization efforts are commendable. The Zacks Consensus Estimate for SKYW’s 2024 earnings has improved 27.3% over the past 90 days. Shares of SKYW have surged 242.3% in the past year.

SKYW has an expected earnings growth rate of more than 100% for 2024. SKYW delivered a trailing four-quarter earnings surprise of 128.02%, on average.

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