We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Should Value Investors Pick Knight-Swift (KNX) Stock Now?
Read MoreHide Full Article
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Knight-Swift Transportation Holdings Inc. (KNX - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Knight-Swift has a trailing twelve months PE ratio of 14.64, as you can see in the chart below:
Image Source: Zacks Investment Research
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 25.30. If we focus on the long-term PE trend, Knight-Swift’s current PE level puts it below its midpoint over the past five years. Moreover, the current level is fairly below the highs for this stock, suggesting it might be a good entry point.
Image Source: Zacks Investment Research
Further, the stock’s PE also compares favorably with the industry’s trailing twelve months PE ratio, which stands at 26.32. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
Image Source: Zacks Investment Research
We should also point out that Knight-Swift has a forward PE ratio (price relative to this year’s earnings) of just 13.04, so it is fair to say that a slightly more value-oriented path may be ahead for Knight-Swift stock in the near term too.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Knight-Swift has a P/S ratio of about 1.72. This is lower than the S&P 500 average, which comes in at 5.05 right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years.
Image Source: Zacks Investment Research
As we can see, the stock is trading near its median value for the time period from a P/S metric. This does not provide us with a conclusive direction as to the relative valuation of the stock in comparison to its historical trend.
Broad Value Outlook
In aggregate, Knight-Swift currently has a Zacks Value Style Score of B, putting it into the top 40% of all stocks we cover from this look. This makes Knight-Swift a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Knight-Swift is 0.87, a level that is lower than the industry average of 1.01. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, KNX is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Knight-Swift might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of C and a Momentum score of A. This gives KNX a Zacks VGM score—or its overarching fundamental grade—of B. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been encouraging. The current quarter has seen four estimates go higher in the past sixty days compared to none lower, while the full year estimate has seen eight upward and zero downward revisions in the same time period.
As a result, the current quarter consensus estimate has risen by 9.3% in the past two months, while the full year estimate has increased 7.9%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
KnightSwift Transportation Holdings Inc. Price and Consensus
This favorable trend is why the stock has a Zacks Rank #2 (Buy) and why we are looking for outperformance from the company in the near term.
Bottom Line
Knight-Swift is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. With a formidable industry rank (among the Top 19%) and strong Zacks Rank, Knight-Swift looks like a strong value contender. In fact, over the past one year, the industry has clearly outperformed the broader market, as you can see below:
Image Source: Zacks Investment Research
So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Should Value Investors Pick Knight-Swift (KNX) Stock Now?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Knight-Swift Transportation Holdings Inc. (KNX - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Knight-Swift has a trailing twelve months PE ratio of 14.64, as you can see in the chart below:
Image Source: Zacks Investment Research
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 25.30. If we focus on the long-term PE trend, Knight-Swift’s current PE level puts it below its midpoint over the past five years. Moreover, the current level is fairly below the highs for this stock, suggesting it might be a good entry point.
Image Source: Zacks Investment Research
Further, the stock’s PE also compares favorably with the industry’s trailing twelve months PE ratio, which stands at 26.32. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
Image Source: Zacks Investment Research
We should also point out that Knight-Swift has a forward PE ratio (price relative to this year’s earnings) of just 13.04, so it is fair to say that a slightly more value-oriented path may be ahead for Knight-Swift stock in the near term too.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Knight-Swift has a P/S ratio of about 1.72. This is lower than the S&P 500 average, which comes in at 5.05 right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years.
Image Source: Zacks Investment Research
As we can see, the stock is trading near its median value for the time period from a P/S metric. This does not provide us with a conclusive direction as to the relative valuation of the stock in comparison to its historical trend.
Broad Value Outlook
In aggregate, Knight-Swift currently has a Zacks Value Style Score of B, putting it into the top 40% of all stocks we cover from this look. This makes Knight-Swift a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Knight-Swift is 0.87, a level that is lower than the industry average of 1.01. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, KNX is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Knight-Swift might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of C and a Momentum score of A. This gives KNX a Zacks VGM score—or its overarching fundamental grade—of B. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been encouraging. The current quarter has seen four estimates go higher in the past sixty days compared to none lower, while the full year estimate has seen eight upward and zero downward revisions in the same time period.
As a result, the current quarter consensus estimate has risen by 9.3% in the past two months, while the full year estimate has increased 7.9%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
KnightSwift Transportation Holdings Inc. Price and Consensus
KnightSwift Transportation Holdings Inc. price-consensus-chart | KnightSwift Transportation Holdings Inc. Quote
This favorable trend is why the stock has a Zacks Rank #2 (Buy) and why we are looking for outperformance from the company in the near term.
Bottom Line
Knight-Swift is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. With a formidable industry rank (among the Top 19%) and strong Zacks Rank, Knight-Swift looks like a strong value contender. In fact, over the past one year, the industry has clearly outperformed the broader market, as you can see below:
Image Source: Zacks Investment Research
So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.