Here's Why Investors Should Give Knight-Swift Stock a Miss Now
Let us delve deeper.
Southward Earnings Estimate Revision: The Zacks Consensus Estimate for second-quarter 2025 earnings has moved 33.9% south in the past 90 days. For the current year, the consensus mark for earnings has been revised 27.5% downward in the same time frame. The unfavorable estimate revisions indicate brokers' lack of confidence in the stock.
Dim Price Performance: The company's price trend reveals that its shares have lost 14.4% so far this year compared with the transportation-truck industry's 8.8% decline.
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Weak Zacks Rank and Style Score:KNX currently carries a Zacks Rank #5 (Strong Sell). The company's current Value Score of D further shows its unattractiveness.
Other Headwinds:KNX has reduced its second-quarter 2025 adjusted earnings per share guidance to the range of 30-38 cents from the prior guided range of 46-50 cents per share. The Zacks Consensus Estimate of 35 cents lies within the updated guidance. The current macro-economic environment is leading to declining consumer sentiment and increasing uncertainty, which has led to the tempered outlook.
High costs related to driver wages, equipment, maintenance, fuel and other expenses are restricting Knight-Swift's bottom-line growth. During first-quarter 2025, salaries, wages and benefits expenses rose 4.1% year over year. High costs naturally put pressure on margins.
KNX's financial metrics indicate that its leverage is elevated and a massive negative for shareholders. The company's cash and equivalents are $209.48 million at the end of first-quarter 2025, which is lower than the long-term debt level of $1.41 billion. This implies that the company does not have enough cash to meet its debt obligations.
The truck industry, of which Knight-Swift is an integral part, has been persistently battling a driver shortage for several years. As old drivers are retiring, trucking companies are finding it difficult to find new drivers to take their place since the low-esteem job mostly does not appeal to the younger generation.
The industry to which KNX belongs currently has a Zacks Industry Rank of 243 (out of 248 groups). Such a weak rank places the industry in the bottom 1% of the Zacks industries. Studies have shown that 50% of a stock price movement is directly tied to the performance of the industry group that it hails from.
In fact, a robust stock in a weak industry is likely to underperform an ordinary stock in a strong industry. Therefore, considering the industry's performance becomes imperative.
Investors interested in the Transportation sector may also consider Copa Holdings CPA and Ryanair RYAAY.
CPA currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
CPA has an expected earnings growth rate of 13.1% for the current year. The company has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average beat of 5.5%. Shares of CPA have risen 16.5% year to date.
RYAAY currently sports a Zacks Rank #1.
The company has a mixed earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in two of the trailing four quarters and missed twice, delivering an average beat of 44.5%. Shares of RYAAY have rallied 15.6% year to date.
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Ryanair Holdings PLC (RYAAY) : Free Stock Analysis Report
Knight-Swift Transportation Holdings Inc. (KNX) : Free Stock Analysis Report
Copa Holdings, S.A. (CPA) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
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