By: April Carson
Knight-Swift Transportation Is Hammering Out A Bottom
We were not surprised to see a very good result from Knight-Swift Transportation (NYSE: KNX). Not only are the market conditions favorable, but the firm is implementing growth and its rivals have been issuing excellent reports. Revenue is growing in all segments, margins are widening, and the stock is declining as a result of it. The move is, in our opinion, less than bearish on technical and fundamental grounds within the market. The bottom line is that Knight-Swift Transportation is expanding, profitable, buying back shares, and paying a dividend, all of which imply higher share prices in our view.
Knight-Swift Transportation Beats And Raises F22 Guidance
The fourth quarter of 2019 was a strong one for Knight-Swift Transportation, with revenue increasing by 42.2% gross and 38.8% ex-fuel surcharges. The increases were due to organic and acquisitive growth that are both anticipated to continue as Knight-Swift attempts to establish the country's dedicated trucking business. All segments helped to drive revenue and margin improvement, with some notable exceptions in Trucking, Logistics, and Intermodal. Although trucking revenue increased over the year, margin improved by 460 basis points. The margin improved by 1360 basis points, and the company grew 7.5% on the top line, in comparison to last year's fourth quarter. Logistics expanded the most, up 139%, while demand is still strong.
On an adjusted basis, earnings rose to $245.6 million, or 13.50 percent of revenue, surpassing expectations on the bottom line. The GAAP $1.52 is up from last year's $0.82, while the adjusted $1.61 is ahead of the Marketbeat consensus by $0.18. Looking ahead, the firm is expecting the momentum to continue into next year, anticipating an EPS forecast that exceeds the current consensus. The anticipated $5.10 to $.530 compares to $5.01 and may be weak in light of economic demand trends that we are seeing.
The Analysts Are Supporting Knight-Swift Transportation
There has yet to be any analyst activity in the wake of Knight-Swift's earnings report, but we feel it is only a matter of time before there is. Based on Marketbeat.com analyst tracking data, we believe that activity will include price target and rating upgrades, which will drive share prices higher. The stock has a strong Buy rating with a significant upswing in the number of analysts who cover it. In terms of coverage, the company has gained seven analysts over the previous year for a 50% boost in coverage. As well as a general agreement price target of $62, which implies 14% of the upside potential. It has been increasing in tandem with this. The most recent analyst shout-out was a cut to Peer Perform from Outperform, with a months-long string of price target hikes, coverage initiation, and upgrades preceding that.
The Technical Outlook: Knight-Swift Transportation Confirms Support
Knight-Swift Transportation has been under significant selling pressure in recent sessions, with the stock falling to support and confirming it before the earnings announcement. Following the report, price action fell but was still within established ranges, suggesting buying at the lower end of the range. If support holds at or near $54.30, we see this stock continuing sideways in its range of $54.30 to $62 with a chance of breaking out to new highs later in the year. Results, analyst activity, or a mix of both might be responsible for igniting those highs.
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About the Blogger:
April Carson is the daughter of Billy Carson. She received her bachelor's degree in Social Sciences from Jacksonville University, where she was also on the Women's Basketball team. She now has a successful clothing company that specializes in organic baby clothes and other items. Take a look at their most popular fall fashions on bossbabymav.com
To read more of April's blogs, check out her website! She publishes new blogs on a daily basis, including the most helpful mommy advice and baby care tips! Follow on IG @bossbabymav
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