Core Viewpoint - Knight-Swift Transportation Holdings (KNX) is positioned well to continue its trend of beating earnings estimates in the upcoming quarterly report [1]. Group 1: Earnings Performance - Knight-Swift has a strong history of beating earnings estimates, particularly in the last two quarters, with an average surprise of 10.55% [2]. - In the last reported quarter, Knight-Swift achieved earnings of $0.28 per share, exceeding the Zacks Consensus Estimate of $0.25 per share, resulting in a surprise of 12.00% [3]. - For the previous quarter, the company was expected to post earnings of $0.33 per share but delivered $0.36 per share, yielding a surprise of 9.09% [3]. Group 2: Earnings Estimates and Predictions - Estimates for Knight-Swift have been trending higher, influenced by its history of earnings surprises [6]. - The company currently has a positive Zacks Earnings ESP (Expected Surprise Prediction) of +3.22%, indicating bullish sentiment among analysts regarding its earnings prospects [9]. - The combination of a positive Earnings ESP and a Zacks Rank of 3 (Hold) suggests a high likelihood of another earnings beat [9]. Group 3: Earnings ESP Insights - Research indicates that stocks with a positive Earnings ESP and a Zacks Rank of 3 or better have a nearly 70% chance of producing a positive surprise [7]. - The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate, with the Most Accurate Estimate reflecting the latest analyst revisions [8]. - The next earnings report for Knight-Swift is expected to be released on July 23, 2025 [9].

Company Overview - Knight-Swift Transportation Holdings (KNX) is expected to report quarterly earnings of $0.34 per share, reflecting a year-over-year increase of +41.7% [3] - Revenues are anticipated to reach $1.87 billion, which is a 1.4% increase from the same quarter last year [3] Earnings Expectations - The earnings report is scheduled for release on July 23, and the stock may rise if the results exceed expectations, while a miss could lead to a decline [2] - The consensus EPS estimate has been revised down by 5.08% over the last 30 days, indicating a reassessment by analysts [4] Earnings Surprise Potential - Knight-Swift has a positive Earnings ESP of +3.22%, suggesting analysts are optimistic about the company's earnings prospects [12] - The company has a Zacks Rank of 3, indicating a neutral outlook, but the combination of a positive Earnings ESP and this rank suggests a likelihood of beating the consensus EPS estimate [12] Historical Performance - In the last reported quarter, Knight-Swift exceeded the expected earnings of $0.25 per share by delivering $0.28, resulting in a surprise of +12.00% [13] - Over the past four quarters, the company has surpassed consensus EPS estimates three times [14] Industry Context - Heartland Express (HTLD), a competitor in the trucking industry, is expected to report a loss of $0.08 per share, marking a year-over-year change of -100% [18] - Heartland's revenues are projected to decline by 13.9% to $236.65 million, with a significant downward revision of 800% in the consensus EPS estimate over the last 30 days [19]

Group 1 - The logistics sector has seen significant engagement from investors, particularly in the ASEAN and US markets, with a focus on banks, telecommunications, logistics, and hotels [1] - The popularity of insurance companies in the Philippines has influenced investment strategies, leading to diversification beyond traditional savings in banks and properties [1] - The trend of investing in blue-chip companies has evolved, with a broader portfolio now including various industries and market capitalizations [1] Group 2 - The entry into the US market has been a strategic move, with insights gained from using a relative's trading account before establishing an independent account [1] - The analysis of US market stocks, particularly in banking, hotels, shipping, and logistics, has been compared to the Philippine market, indicating a cross-market investment strategy [1] - The engagement with platforms like Seeking Alpha has facilitated knowledge sharing and enhanced market analysis capabilities for investors [1]

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Core Viewpoint - Knight-Swift Transportation Holdings has seen a 7.8% increase in share price over the past month, outperforming the S&P 500, but there are concerns about potential pullbacks leading up to the next earnings release [1] Estimates Movement - Consensus estimates for Knight-Swift have trended downward, with a significant shift of -23.6% in the past month [2] VGM Scores - Knight-Swift currently holds a Growth Score of B, a Momentum Score of C, and a Value Score of D, placing it in the bottom 40% for the value investment strategy, resulting in an aggregate VGM Score of C [3] Outlook - The downward trend in estimates suggests a negative outlook for Knight-Swift, reflected in its Zacks Rank of 5 (Strong Sell), indicating expectations of below-average returns in the coming months [4]

Group 1: Knight-Swift Transportation - Goldman Sachs highlights Knight-Swift as a notable company with increased hedge fund ownership, indicating potential for strong performance in the transportation sector [1] - Knight-Swift is the largest truckload carrier in the U.S., and its diversified operations include truckload, less-than-truckload (LTL), logistics, and intermodal services, which may provide stability during economic downturns [4] - The company is projected to recover from a -3.86% growth dip in 2023 to a 3.76% increase in 2024, maintaining a 1.66% annual dividend yield of $0.18 per share [5] - Knight-Swift's Q1 2025 earnings report showed Earnings Per Share (EPS) of $0.28, slightly below the $0.29 estimates, while Q2 EPS guidance was lowered to $0.30–$0.38 due to uncertainties in trade policy [5][6] Group 2: Industry Outlook - The transportation industry, particularly companies like Knight-Swift, is viewed as resilient during economic slowdowns, making it an attractive investment option [6] - The ongoing trade wars and tariff discussions are influencing the current economic landscape, which could impact the transportation sector [4]

Investment Rating - The report does not explicitly state an investment rating for the transportation and logistics industry Core Insights - The report highlights a positive trend in U.S. imports, with a 6.1% week-over-week increase as of May 18, outperforming seasonal expectations by 980 basis points and showing a 2.8% year-over-year increase [2] - Spot rates for truckload transportation have surged, with dry van rates increasing by 6.1% week-over-week, outperforming historical averages [3] - There are concerns regarding potential freight demand impacts due to tariffs, with expectations of a flat outlook for dry van spot rates in 2026 [6] Summary by Sections Import & Congestion Monitor - Container bookings from China to the U.S. are at five-year lows, down 27% compared to 2023, indicating subdued future demand [2] - The report notes a recovery in container imports at the Port of LA/LB, which increased by 24% week-over-week [2] Truckload and Rail Data - Spot rates for dry van, reefers, and flatbed have all increased week-over-week, with dry van rates now 4% higher year-over-year [3] - The dry van load-to-truck ratio increased by 57% week-over-week, indicating a tightening market [6] - Rail management teams express skepticism about the feasibility of transcontinental mergers due to regulatory barriers [7] Airfreight & Surface Transportation - Airfreight rates have been monitored closely due to tariff implications, with significant declines observed in key freight lanes, particularly the China-U.S. lane, which fell by 6% week-over-week [10] - The overall airfreight market is experiencing broad-based weakness, with all major lanes underperforming seasonal expectations year-to-date [10] Rail Performance - The report card for railroads indicates varying performance levels, with some railroads rated as excellent while others are fair or poor [9] - Regulatory challenges are highlighted as a significant barrier to potential mergers in the rail industry, with environmental impact studies being particularly burdensome [7]

Financial Performance - Consolidated operating income increased 224.3% to $66.7 million for the quarter ended March 31, 2025, compared to the same period last year [107]. - Net income attributable to Knight-Swift rose 1262.8% to $30.6 million for the quarter ended March 31, 2025 [107]. - Total revenue for the quarter was $1,824.4 million, slightly up from $1,822.5 million in the previous year [109]. - The company reported a $33.3 million increase in net income to $30.6 million in the first quarter of 2025, compared to a $2.6 million loss in the same period last year [128]. - Adjusted Operating Income increased by 59.7% year-over-year to $46,485, while GAAP Operating Income rose 92.7% to $44,600 [142]. - Adjusted Net Income attributable to Knight-Swift for Q1 2025 was $45,372,000, compared to $19,774,000 in Q1 2024 [207]. - Adjusted EPS for Q1 2025 was $0.28, up from $0.12 in Q1 2024 [208]. - Total revenue for Q1 2025 was $1,824,362,000, slightly up from $1,822,467,000 in Q1 2024 [212]. Segment Performance - Truckload segment achieved a 96.3% operating ratio, with revenue per loaded mile increasing 1.5% year-over-year for the first time in 10 quarters [108]. - LTL segment's operating ratio was 96.4%, with a 420 basis points year-over-year deterioration due to start-up costs and integration expenses [108]. - Logistics segment reported an 11.8% year-over-year revenue increase, with a gross margin of 18.1% [108]. - Intermodal segment's operating ratio was 102.0%, with a 1.1% decline in revenue per load year-over-year [108]. - Truckload Segment revenue increased by a low single-digit percent sequentially in the second quarter, with operating margins remaining stable [119]. - LTL Segment revenue, excluding fuel surcharge, grew by 25% - 30% year-over-year in the second quarter, driven by shipment count growth and yield improvement [119]. - Logistics Segment revenue decreased by a low single-digit percent sequentially in the second quarter, while the Adjusted Operating Ratio remained stable [125]. - Total revenue for the Truckload Segment was $1,192,550, a decrease of 5.6% from $1,263,015 in the same quarter of 2024 [216]. - Total revenue for the LTL Segment rose to $352,401, representing a 25% increase from $282,122 in the same quarter of 2024 [219]. - Total revenue for the Logistics Segment increased to $141,621, up 11.8% from $126,729 in the same quarter of 2024 [220]. Cash Flow and Liquidity - Generated $109.4 million in operating cash flows and $70.0 million in Free Cash Flow during the quarter [108]. - Free Cash Flow for the quarter ended March 31, 2025, was $69,991, reflecting a strong cash generation capability [222]. - Total unrestricted liquidity as of March 31, 2025, was $1,020,155, including cash and cash equivalents of $209,480 [223]. - Net cash provided by operating activities increased by $72,154 to $109,429 compared to the same quarter in 2024 [234]. - The working capital deficit improved to $193.8 million as of March 31, 2025, from $258.0 million as of December 31, 2024 [233]. Expenses and Costs - Salaries, wages, and benefits increased by $28,752,000 to $721,659,000, representing a 4.1% rise year-over-year [167]. - Fuel expenses decreased by $27,343,000 to $207,246,000, a decline of 11.7% compared to $234,589,000 in the previous year [170]. - Insurance and claims expenses dropped by $30,221,000 to $92,225,000, a decrease of 24.7% from $122,446,000 in Q1 2024 [176]. - Operating taxes and licenses increased by $3,037,000 to $34,366,000, reflecting a 9.7% rise year-over-year [181]. - Depreciation and amortization of property and equipment decreased by $4,386,000 to $177,479,000, a decline of 2.4% from $181,865,000 in the previous year [186]. - Amortization of intangibles increased by $703,000 to $19,246,000, a rise of 3.8% compared to $18,543,000 in Q1 2024 [189]. - Rental expense for Q1 2025 was $42,866,000, a decrease of 0.3% compared to Q1 2024 [190]. - Purchased transportation expense remained flat at $277,294,000, accounting for 15.2% of total revenue in Q1 2025 [194]. - Miscellaneous operating expenses decreased by 15.4% to $45,535,000, primarily due to an $8.9 million increase in gain on sales of property and equipment [197]. - Interest expense decreased by 2.5% to $40,203,000 in Q1 2025, attributed to lower interest rates despite higher debt balances [200]. - Income tax expense increased by 380.4% to $10,303,000, reflecting a higher pretax income with an effective tax rate of 25.4% [202]. Market Outlook and Strategic Initiatives - The company anticipates a cautious market outlook due to uncertainties in trade policy and potential impacts on freight volumes [114]. - The Truckload segment is expected to pursue opportunities through a decentralized operating model and further expand its network following the DHE Acquisition [123]. - The company anticipates an increase in depreciation and amortization expense as a percentage of revenue due to planned purchases of revenue equipment in 2025 [124]. - The company expects labor costs to remain inflationary, leading to potential future pay increases for driving associates [168]. - The company anticipates a lower pace of facility expansion in 2025 compared to 2024, focusing on revenue and margin expansion [151]. Debt and Financing - As of March 31, 2025, Knight-Swift had $209.5 million in unrestricted cash and $2.6 billion in outstanding debt [108]. - The 2021 Term Loan A-2 has an outstanding balance of $349.3 million, due September 2026 [236]. - The 2021 Term Loan A-3 has an outstanding balance of $769.5 million, due September 2026 [236]. - The 2023 Term Loan has an outstanding balance of $249.5 million, due September 2026 [236]. - Finance lease obligations total $566.9 million [236]. - The company reported a $10.4 million increase in cash used for acquisitions of leased properties [238]. - Net cash used in financing activities increased by $54.1 million, driven by an $87.0 million decrease in net borrowings on the 2021 Revolver [239]. Operational Challenges - The company experienced a qualified driver shortage, leading to increased compensation for driving associates [241]. - Operating expenses are sensitive to inflation, impacting costs for new equipment acquisition and maintenance [241]. - There have been no material changes in market risks as discussed in the previous annual report [243].

Core Insights - Knight-Swift Transportation Holdings Inc. (KNX) reported first-quarter 2025 adjusted earnings of 28 cents per share, exceeding the Zacks Consensus Estimate of 25 cents and showing over 100% year-over-year improvement, although it fell below the guided range of 29-33 cents [1] - Total revenues reached $1.82 billion, surpassing the Zacks Consensus Estimate of $1.81 billion and reflecting a slight year-over-year increase of 0.1% [1] Financial Performance - Total operating expenses decreased by 2.5% year over year to $1.75 billion [2] - Truckload segment revenues totaled $1.04 billion, down 4.2% year over year due to a 5.4% decrease in loaded miles, with adjusted segmental operating income growing 59.7% year over year to $46.48 million [3] - The Less-Than-Truckload (LTL) segment generated revenues of $305.25 million, up 26.7% year over year, driven by a 24.2% increase in shipments per day, although adjusted segmental operating income fell 26.8% year over year to $17.72 million [4] - Logistics segment revenues amounted to $141.62 million, an increase of 11.8% year over year, with adjusted operating income rising 73.4% year over year to $6.30 million [5] - Intermodal revenues totaled $91.1 million, up 3.5% year over year, despite a 1.1% decline in revenue per load [6] - Revenues from all other segments declined 15.9% year over year to $71.56 million due to the winding down of a third-party carrier insurance program [7] Liquidity and Guidance - At the end of the first quarter, cash and cash equivalents were $209.48 million, down from $218.26 million in the prior quarter, while long-term debt decreased to $1.41 billion from $1.44 billion [8] - KNX has revised its second-quarter 2025 adjusted earnings per share guidance to a range of 30-38 cents, down from the previous range of 46-50 cents [9] - Truckload segment revenues are expected to increase in the low single-digit percent sequentially in the second quarter, while LTL segment revenues are projected to grow 25%-30% year over year [10]

Group 1 - The investment approach focuses on long-term investments while incorporating short-term shorts to uncover alpha opportunities [1] - The analysis is based on bottom-up evaluation, emphasizing the fundamental strengths and weaknesses of individual companies [1] - The goal is to identify companies with solid fundamentals, sustainable competitive advantages, and growth potential [1]