The market expects Knight-Swift Transportation Holdings (KNX) to deliver a year-over-year decline in earnings on lower revenues when it reports results for the quarter ended September 2024. This widely-known consensus outlook is important in assessing the company's earnings picture, but a powerful factor that might influence its near-term stock price is how the actual results compare to these estimates. The stock might move higher if these key numbers top expectations in the upcoming earnings report, which ...

Knight-Swift Transportation Holdings Inc. (KNX) is currently mired in multiple headwinds, which, we believe, have made it an unimpressive investment option. Let's delve deeper. Southward Earnings Estimate Revision:The Zacks Consensus Estimate for third-quarter 2024 earnings has been revised 10.2% downward over the past 90 days. For 2024, the consensus mark for earnings has moved 13.4% south in the same time frame. The bearish alterations in estimate revisions underscore a notable decline in brokers' confide ...

Core Viewpoint - KnightSwift Transportation (KNX) has experienced a significant decline in share price, down 49.5% year-to-date, contrasting sharply with the broader market performance, including a 17.9% rise in the S&P 500 index [1] Financial Performance - The Zacks Consensus Estimate for KNX's 2024 earnings is projected at $1.12 per share, reflecting a 35% decline from 2023's actual earnings [3] - Revenue estimates for 2024 stand at $7.61 billion, indicating a 3.5% decrease from the previous year [3] - Current-quarter earnings are estimated at 35 cents per share, representing a 14.6% year-over-year decline, while revenues are expected to be $1.95 billion, also down 3.5% year-over-year [4] Growth Challenges - Weak freight demand is negatively impacting revenues, compounded by high operational costs related to driver wages, equipment, maintenance, and fuel [4] - The company's liquidity position is concerning, with cash and cash equivalents of $336 million and a current ratio of 0.88, indicating insufficient cash to meet current debt obligations [5] - The times interest earned ratio of 1.5 is significantly lower than the industry average of 9, highlighting financial strain [5] Positive Developments - KnightSwift reported an 18.9% year-over-year increase in revenues for Q2 2024, largely driven by the acquisition of U.S. Xpress Enterprises, effective July 1, 2023 [6] - Revenues, excluding truckload and LTL fuel surcharge, grew 18.1% year-over-year to $1.64 billion [6] - The Less-Than-Truckload segment generated revenues of $263.09 million in Q2 2024, up 15.1% year-over-year [7] Overall Outlook - Despite some areas of strength, projected declines in earnings and revenues, along with liquidity concerns, suggest that KnightSwift may face challenges in maintaining its growth momentum [8]

A month has gone by since the last earnings report for Knight-Swift Transportation Holdings (KNX) . Shares have added about 2.8% in that time frame, underperforming the S&P 500. Will the recent positive trend continue leading up to its next earnings release, or is Knight-Swift due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers. Earnings Miss in Q2 Knigh ...

Core Viewpoint - Knight-Swift Transportation Holdings (KNX) is positioned for growth, with 2Q24 earnings indicating a potential inflection point in earnings growth, supported by revenue trends, macroeconomic indicators, and management insights [2][4]. Business Overview - KNX operates primarily in the North American truckload market, with trucking accounting for 66% of revenue, followed by less-than-truckload (15%), logistics (8%), and intermodal (6%) [3]. - In 2Q24, KNX's revenue grew by 18.9% year-over-year, reaching $1.85 billion, while operating income increased approximately 72% sequentially from $51 million in 1Q24 to $89 million in 2Q24 [3]. - Excluding a $12.5 million auto liability claim charge, the earnings per share (EPS) would have exceeded consensus estimates [3]. Signs of Growth - Total revenue growth excluding fuel surcharge has accelerated, suggesting potential for continued growth in the upcoming quarters [5]. - Utilization rates have improved, with average miles per tractor increasing from 19,894 to 20,518, indicating operational efficiency [5]. - Positive macroeconomic indicators, such as an expected interest rate cut in 2H24 and strong US GDP growth, support a favorable outlook for the trucking industry [5][6]. - Retailers are approaching restocking levels, which is likely to increase logistical demand [6]. Strategic Initiatives - KNX has expanded its door count by 22% since the beginning of the year, positioning the company to benefit from increased demand [6]. - The acquisition of DHE enhances KNX's market presence, particularly in California, and provides additional less-than-truckload facilities [6]. - Management has noted a healthy demand for capacity, with customers securing additional capacity to support elevated volumes, indicating a potential industry turnaround [6]. Valuation - A forward price-to-earnings (PE) model suggests an upside potential of 48% by FY25, driven by expected strong earnings growth [7]. - The price target for KNX is set at $77, based on consensus FY25 EPS estimates and historical valuation metrics [7].

United Airlines Holdings, Inc. (UAL) reported second-quarter 2024 earnings per share (excluding 18 cents from non-recurring items) of $4.14, which surpassed the Zacks Consensus Estimate of $3.97. Earnings decreased 17.7% on a year-over-year basis. Operating revenues of $14.98 billion missed the Zacks Consensus Estimate of $15.13 billion. The top line increased 5.7% year over year due to upbeat air-travel demand. This was driven by a 5.2% rise in passenger revenues (which accounted for 91.2% of the top line) ...

Financial Data and Key Metrics Changes - Revenue increased by 11.8% year-over-year, driven by an increase in revenue per load despite a flat load count, reflecting the inclusion of U.S. Xpress in the current quarter [3][4] - Revenue per load increased by 10.8% year-over-year in the second quarter, representing a 4.6% increase from the previous quarter [4] - Operating income within All Other Segments was $3.9 million, marking the first operating profit for this category in seven quarters [11] Business Line Data and Key Metrics Changes - In the Intermodal business, load count grew sequentially by 10.8% while maintaining stable revenue per load, improving the operating ratio by 380 basis points over the first quarter [7] - The Truckload segment is expected to see slight revenue growth in the third and fourth quarters, with sequential improvements in operating margins [14] - The LTL segment anticipates low double-digit percent growth in revenue year-over-year, with mid-single-digit percent improvement in shipment count [16] Market Data and Key Metrics Changes - The logistics business is expected to face challenges in a down market but has significant runway for growth as market conditions improve [2][22] - The company expects sequential volume growth in the second half based on progress in the bid season, which should help diversify the business mix and reduce costs [9] Company Strategy and Development Direction - The company aims to leverage its power-only capabilities to complement asset businesses and enhance returns on capital assets [5] - There is a focus on both organic and inorganic growth, particularly in the LTL segment, with plans to fill regional gaps through acquisitions [67][70] - The company is positioned to endure a difficult market and is prepared to improve margins and cash flow when market conditions inflect [22][23] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about nearing a balanced market, with expectations for improved operating ratios in the upcoming quarters [29][30] - The company is monitoring various data points, including freight behavior outside of seasonal patterns, to gauge market conditions [74] - Management highlighted the importance of customer discussions and inventory levels as indicators of market confidence [55] Other Important Information - The company does not anticipate significant changes in the tax rate in the near term, as lower operating income has impacted the effective tax rate [83] - Equipment gains are projected to be in the range of $5 million to $10 million per quarter [19] Q&A Session Summary Question: Truckload outlook for Q3 and Q4 - Management noted that the market is getting closer to balance, with expectations for improved operating ratios and potential rate increases in the next bid season [27][30] Question: Spot rates and market conditions - Management acknowledged the discrepancy between their confidence in market recovery and low spot rates, attributing their outlook to internal data and customer discussions [42][49] Question: U.S. Xpress performance and market support - Management indicated that U.S. Xpress has made progress primarily through self-help, with expectations for further improvement as market conditions strengthen [104][108] Question: LTL segment growth and capacity filling - Management discussed the strategy for filling new capacity through existing customer relationships and competitive pricing, emphasizing a cautious approach to growth [112][118]

Financial Performance - Q2 2024 - Net income decreased by 67.9% from Q2 2023, from $79 million to $20 million[4] - Adjusted net income decreased by 49.9% from Q2 2023, from $63 million to $39 million[4] - Earnings per share decreased by 66.7% from Q2 2023, from $0.49 to $0.13[4] - Adjusted EPS decreased by 51.0% from Q2 2023, from $0.24 to $0.13, which includes a $0.06 per share charge for the settlement of a truckload auto liability claim from 2020[4] - Total revenue increased by 18.9% from Q2 2023, from $1.553 billion to $1.847 billion[29] - Revenue excluding fuel surcharge increased by 18.1% from Q2 2023, from $1.390 billion to $1.642 billion[11] - Operating income decreased by 32.5% from Q2 2023, from $94 million to $63 million[11] - Adjusted operating income decreased by 22.8% from Q2 2023, from $115 million to $89 million[11] Segment Performance - Truckload - Truckload revenue excluding fuel surcharge increased by 33.0% from Q2 2023, from $829.4 million to $1.1028 billion[16] - Truckload operating income decreased by 65.4% from Q2 2023, from $67.9 million to $23.5 million[16] - Truckload adjusted operating income decreased by 54.3% from Q2 2023, from $68.2 million to $31.2 million[16] - Truckload operating ratio increased to 98.1% from 92.9%[16] - Truckload adjusted operating ratio increased to 97.2% from 91.8%[16] - Average revenue per tractor increased by 4.0% from Q2 2023, from $46,461 to $48,309[37] - Average tractors increased by 27.9% from Q2 2023, from 17,851 to 22,828[37] - Miles per tractor increased by 8.5% from Q2 2023, from 18,904 to 20,518[37] Segment Performance - Less-Than-Truckload (LTL) - LTL revenue excluding fuel surcharge increased by 15.1% from Q2 2023, from $228.6 million to $263.1 million[19] - LTL operating income increased by 9.3% from Q2 2023, from $30.2 million to $33.0 million[19] - LTL adjusted operating income increased by 8.2% from Q2 2023, from $34.2 million to $37.0 million[19] - LTL operating ratio increased to 89.2% from 88.7%[19] - LTL adjusted operating ratio increased to 85.9% from 85.1%[19] - LTL revenue excluding fuel surcharge per hundredweight increased by 13.4% year-over-year[21] - LTL shipments per day increased by 8.4% from Q2 2023, from 18,898 to 20,482[40] - LTL weight per shipment decreased by 4.7% from Q2 2023, from 1,058 to 1,008[40] - LTL revenue excluding fuel surcharge per hundredweight increased by 13.4% from Q2 2023, from $15.19 to $17.22[40] - LTL revenue excluding fuel surcharge per shipment increased by 8.0% from Q2 2023, from $160.66 to $173.50[40] Segment Performance - Logistics - Logistics revenue excluding intersegment transactions increased by 11.8% from Q2 2023, from $117.8 million to $131.7 million[43] - Logistics operating income decreased by 50.3% from Q2 2023, from $9.6 million to $4.8 million[43] - Logistics adjusted operating income decreased by 40.2% from Q2 2023, from $9.9 million to $5.9 million[43] - Logistics operating ratio increased to 96.4% from 92.0%[43] - Logistics adjusted operating ratio increased to 95.5% from 91.6%[43] - Logistics revenue per load increased by 10.8% from Q2 2023, from $1,652 to $1,831[23] - Logistics gross margin decreased by 150 bps from Q2 2023, from 19.4% to 17.9%[23] Segment Performance - Intermodal - Intermodal revenue excluding intersegment transactions decreased by 6.5% from Q2 2023, from $104.3 million to $97.5 million[25] - Intermodal operating loss improved by 74.1% from Q2 2023, from $(6.6) million to $(1.7) million[25] - Intermodal operating ratio improved to 101.8% from 106.4%[25] - Intermodal average revenue per load decreased by 4.9% year-over-year[25] - Intermodal load count decreased by 1.7% from Q2 2023, from 37,945 to 37,290[63] - Intermodal average tractors decreased by 6.6% from Q2 2023, from 656 to 613[63] - Intermodal average containers decreased by 2.0% from Q2 2023, from 12,842 to 12,580[63] Segment Performance - All Other Segments - All Other Segments revenue decreased by 47.5% from Q2 2023, from $130.1 million to $68.3 million[27] - All Other Segments operating income/(loss) improved by 155.1% from Q2 2023, from $(7.1) million to $3.9 million[27] Guidance - The company expects adjusted EPS to be in the range of $0.31-$0.35 in Q3 and $0.32-$0.36 in Q4[51]

9 | --- | --- | --- | --- | --- | --- | --- | --- | --- | |------------------------------------------------------------|-------|--------------------|----------------|-----------------------------------|--------------|---------------------|-------|------------| | Condensed Consolidated Statements of Comprehensive | | \nQuarter \n2024 | Income \nEnded | (Unaudited) \nJune 30, \n2023 | 1 | Year-to-Date \n2024 | June | 30, \n2023 | | | | | | (In thousands, | except per | share data) | | | | Revenue: | | | | | | ...

Wall Street expects a year-over-year decline in earnings on higher revenues when Knight-Swift Transportation Holdings (KNX) reports results for the quarter ended June 2024. While this widely-known consensus outlook is important in gauging the company's earnings picture, a powerful factor that could impact its near-term stock price is how the actual results compare to these estimates. The earnings report, which is expected to be released on July 24, 2024, might help the stock move higher if these key numbers ...