BofA Securities has responded to Knight-Swift Transportation's (NYSE: KNX) third-quarter earnings by increasing the company's price target to $58 from $57, while reaffirming a Buy rating on the stock.
The transportation company reported an adjusted earnings per share (EPS) of $0.34 for the third quarter of 2024, a 17% decline from the previous year but still surpassing both BofA Securities' projection of $0.33 and the consensus estimate of $0.32.
Knight-Swift's CEO Adam Miller highlighted that despite the challenging market conditions faced by the Truckload, Logistics, and Intermodal segments, the company is experiencing a seasonal rise in demand. The firm has witnessed a growth in fourth-quarter project activity, a contrast to the same period in 2023, and has successfully negotiated rate increases in recent truckload bids.
The company noted a 1% increase in Truckload revenue per mile between the second and third quarters, exceeding BofA Securities' expectation of no change. Additionally, Knight-Swift has observed a shift among customers, who are now favoring asset-based carriers over brokers, partly due to a tighter market.
In other recent news, Knight-Swift Transportation, one of North America's largest truckload carriers, reported its third-quarter earnings for 2024. Amid challenging market conditions, the company unveiled mixed results, with a year-over-year revenue decline of 5.3%, excluding fuel surcharges, largely attributed to the recent acquisition of U.S. Xpress.
However, there was a slight sequential improvement in the consolidated adjusted operating ratio, marking its first increase since 2021. The logistics segment experienced a 9.5% revenue drop, while for the first time in six quarters, intermodal revenue saw growth. Knight-Swift also provided forward-looking guidance for the fourth quarter of 2024 and the first quarter of 2025, with adjusted EPS projected to range from $0.32 to $0.36 and $0.29 to $0.33, respectively.
The company anticipates a gradual market recovery in 2025, with potential rate increases and margin enhancements due to investments in terminal networks, particularly in California, Nevada, and Arizona.
InvestingPro Insights
Knight-Swift Transportation's recent performance and future outlook can be further contextualized with real-time data from InvestingPro. The company's market capitalization stands at $8.54 billion, reflecting its significant presence in the transportation sector. Despite the challenging market conditions mentioned in the earnings report, Knight-Swift has maintained a revenue growth of 11.57% over the last twelve months, with quarterly revenue growth reaching 18.91% in Q2 2024.
InvestingPro Tips highlight that Knight-Swift has raised its dividend for 4 consecutive years and has maintained dividend payments for 21 consecutive years, demonstrating a commitment to shareholder returns even in difficult times. This aligns with the company's ability to navigate through market challenges as discussed in the earnings report.
However, investors should note that the company is trading at a high P/E ratio of 126.44, which may indicate that the stock is priced at a premium relative to its earnings. This valuation metric could be important to consider in light of the company's revised earnings forecasts for the upcoming quarters.
For readers seeking a more comprehensive analysis, InvestingPro offers 8 additional tips for Knight-Swift Transportation, providing deeper insights into the company's financial health and market position.
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