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Why Is Knight-Swift (KNX) Down 0.6% Since Last Earnings Report?
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A month has gone by since the last earnings report for Knight-Swift Transportation Holdings (KNX - Free Report) . Shares have lost about 0.6% 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 catalysts.
Earnings Beat at Knight-Swift in Q2
Knight-Swift 's earnings (excluding 10 cents from non-recurring items) of 57 cents per share beat the Zacks Consensus Estimate of 35 cents. However, the bottom line dipped 1.7% year over year due to persistent weakness in the freight environment, aggravated by the coronavirus pandemic.
Meanwhile, total revenues of $1,060.7 million missed the Zacks Consensus Estimate of $1,078.6 million and fell 14.6% year over year with sluggish revenues at each of its three segments.
Total operating expenses declined 15.4% year over year to $958.53 million. Adjusted operating ratio (operating expenses as a percentage of revenues) improved to 87.6% from 87.8% in the year-ago quarter. Lower the value of the metric, the better. Knight-Swift’s adjusted operating income declined 9.5% year over year to $123.96 million.
The company exited the second quarter with cash and cash equivalents of $117.76 million compared with $159.72 million at the end of 2019. During the first half of 2020, the company returned $27.7 million to its shareholders in the form of dividends and $34.6 million through share buybacks.
Segmental Results
Revenues in the Trucking segment totaled (excluding fuel surcharge and inter-segment transactions) $816.03 million, down 9.4% year over year. Results were hampered by 6.5% decline in average revenue per tractor. Average revenue per tractor was weak in the quarter due to a 3.9% decrease in miles per tractor. Adjusted segmental operating income also dropped 7.9% to $118.17 million. Adjusted operating ratio (operating expenses as a percentage of revenues) improved 30 basis points (bps) to 85.5%.
Revenues in the Logistics segment (before inter-segment transactions) amounted to $67.07 million, down 16.5% year over year due to 14.2% decrease in brokerage revenues. While adjusted operating ratio deteriorated 180 bps to 95.5%, segmental operating income slumped 39.5% to $3.04 million.
Revenues in the Intermodal segment (excluding inter-segment transactions) totaled $82.7 million, down 29.8% year over year as a result of load count and revenue per load declining 23.9% and 7.8% respectively. Segmental adjusted operating ratio deteriorated 890 bps to 105.3%. Segmental operating loss was $4.41 million, against operating income of $4.19 million in the year-ago period.
2020 Outlook
The company expects adjusted earnings per share in the band of $2.15-$2.30 for the full year. Net capital expenditures are anticipated between $500 million and $525 million with deferral in certain investments. Previously, the same was expected in the range of $515-$540 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 26.8% due to these changes.
VGM Scores
At this time, Knight-Swift has a subpar Growth Score of D, however its Momentum Score is doing a bit better 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Knight-Swift has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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Why Is Knight-Swift (KNX) Down 0.6% 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 0.6% 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 catalysts.
Earnings Beat at Knight-Swift in Q2
Knight-Swift 's earnings (excluding 10 cents from non-recurring items) of 57 cents per share beat the Zacks Consensus Estimate of 35 cents. However, the bottom line dipped 1.7% year over year due to persistent weakness in the freight environment, aggravated by the coronavirus pandemic.
Meanwhile, total revenues of $1,060.7 million missed the Zacks Consensus Estimate of $1,078.6 million and fell 14.6% year over year with sluggish revenues at each of its three segments.
Total operating expenses declined 15.4% year over year to $958.53 million. Adjusted operating ratio (operating expenses as a percentage of revenues) improved to 87.6% from 87.8% in the year-ago quarter. Lower the value of the metric, the better. Knight-Swift’s adjusted operating income declined 9.5% year over year to $123.96 million.
The company exited the second quarter with cash and cash equivalents of $117.76 million compared with $159.72 million at the end of 2019. During the first half of 2020, the company returned $27.7 million to its shareholders in the form of dividends and $34.6 million through share buybacks.
Segmental Results
Revenues in the Trucking segment totaled (excluding fuel surcharge and inter-segment transactions) $816.03 million, down 9.4% year over year. Results were hampered by 6.5% decline in average revenue per tractor. Average revenue per tractor was weak in the quarter due to a 3.9% decrease in miles per tractor. Adjusted segmental operating income also dropped 7.9% to $118.17 million. Adjusted operating ratio (operating expenses as a percentage of revenues) improved 30 basis points (bps) to 85.5%.
Revenues in the Logistics segment (before inter-segment transactions) amounted to $67.07 million, down 16.5% year over year due to 14.2% decrease in brokerage revenues. While adjusted operating ratio deteriorated 180 bps to 95.5%, segmental operating income slumped 39.5% to $3.04 million.
Revenues in the Intermodal segment (excluding inter-segment transactions) totaled $82.7 million, down 29.8% year over year as a result of load count and revenue per load declining 23.9% and 7.8% respectively. Segmental adjusted operating ratio deteriorated 890 bps to 105.3%. Segmental operating loss was $4.41 million, against operating income of $4.19 million in the year-ago period.
2020 Outlook
The company expects adjusted earnings per share in the band of $2.15-$2.30 for the full year. Net capital expenditures are anticipated between $500 million and $525 million with deferral in certain investments. Previously, the same was expected in the range of $515-$540 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 26.8% due to these changes.
VGM Scores
At this time, Knight-Swift has a subpar Growth Score of D, however its Momentum Score is doing a bit better 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Knight-Swift has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.