On Wednesday, Loop Capital adjusted its stance on Knight Transportation (NYSE: NYSE:KNX), downgrading the stock from Buy to Hold and reducing its price target to $53 from the previous $63. The decision came after Knight-Swift provided a profit warning, forecasting Q1 earnings per share (EPS) to be between $0.19 and $0.20, a significant decrease from the initial guidance of $0.37 to $0.41 issued 12 weeks prior.
The shift in Loop Capital's rating reflects a broader concern within the freight industry. The analyst cited CSX (NASDAQ:CSX)'s results, which have remained stable despite a general lack of freight demand. However, Knight-Swift's situation appears more challenging, as indicated by the recent profit warning. The analyst noted that the downgrade was already under consideration following J.B. Hunt's disheartening earnings call on Tuesday, which highlighted weak demand across all five of its business divisions with no signs of improvement.
Loop Capital's reassessment also acknowledges that while Knight-Swift has been considered a top performer in the sector, current market conditions suggest that the industry's bottom has not yet been reached. The analyst expressed a need for caution, opting to wait for a more favorable alignment in the US freight economy before reassuming a more positive outlook on the company.
The revised earnings estimates from Loop Capital project a drop for Knight Transportation, with the 2024 EPS forecast decreasing from $2.41 to $1.61, and the 2025 EPS estimate going from $3.39 to $2.61. This recalibration in expectations is a direct response to the recent profit warning and the current state of demand within the truckload industry.
InvestingPro Insights
As Loop Capital revises its outlook on Knight Transportation, investors may be seeking additional metrics to gauge the company's performance and future prospects. According to real-time data from InvestingPro, Knight Transportation has a market capitalization of $7.81 billion and is trading at an adjusted P/E ratio of 44.69 for the last twelve months as of Q4 2023. Despite a slight decrease in revenue growth of -3.86% over the same period, the company has seen a quarterly revenue growth of 10.8% in Q1 2023. Moreover, Knight Transportation has maintained a consistent dividend payout, with a current dividend yield of 1.32% and a notable dividend growth of 33.33% over the last twelve months.
InvestingPro Tips reveal that Knight Transportation has raised its dividend for four consecutive years and has maintained dividend payments for 21 consecutive years, showcasing a commitment to returning value to shareholders. Furthermore, the stock is trading near its 52-week low, which may attract investors looking for potential value opportunities. It's important to note that while the stock's RSI suggests it is in oversold territory, analysts predict the company will be profitable this year and it has been profitable over the last twelve months, which could signal a potential turnaround in the future.
For investors interested in a deeper analysis, there are additional InvestingPro Tips available for Knight Transportation. Using the coupon code PRONEWS24, readers can get an extra 10% off a yearly or biyearly Pro and Pro+ subscription, which includes a comprehensive list of tips to aid in investment decisions. To explore these insights, visit https://www.investing.com/pro/KNX.
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